Doug Albee, a Riverside, CA Used Car Dealer told us, “Last week I talked to a car buyer who has credit challenges, and only works part time, and has a limited income, newly married with a child. This car buyer visited a dealership and looked at cars in the $15,000 range. After telling the salesperson he had very limited money for a down payment, the salesman stated that would not be an issue, he could commit to a substantial deferred down payment. The buyer responded that he would not be able to pay any additional money toward the down payment, there was nowhere he could obtain this money. The salesman then stated that would not be a problem, all he had to do, is when the deferred down payment was due, just negotiate it away, or defer it for a longer period of time. This salesman was more interested in a commission, than what was best for his customer.”
There are times when committing to a deferred down payment is smart, and times when it is not. In this instance the buyer was looking at a car he could not afford, and failure to pay this deferred payment could result in more negative credit than he already has, or maybe losing the car he just purchased and any money he has paid.
A good reason to commit to a deferred down payment may be you know for sure you have a sum of money coming, and want to decrease the principal, to either lower the payment, or the amount of interest to be paid.
A lender may require more money than you now have for a down payment, either due your credit history or the loan to value of the car you are purchasing is too high, this could change from lender to lender. With excellent credit, it is possible to purchase a car with a zero down payment.
Never commit to a deferred down payment you are not sure you can pay. Sometimes a buyer is so excited about the car he is purchasing, he will commit to anything, just to be able to drive off with his new car, and will worry about how he will get the money later. If not paid on time, this will have a negative effect on your relationship with this lender.
Never commit to a deferred down payment that does not show on your contract. Promissory notes or held checks, and verbal promises, are not legal, they constitute a second contract and there can only be one contract. It should also be noted that this payment must be due before the second regular payment.
You can see more about and by Doug Albee a Riverside, CA Used Car Dealer on his Consumer Advocate website: http://dhmotors-riversideusedcardealer.com/.
Or, visit his office at:
D & H Motors
10158 Arlington Ave
Riverside, CA 92503