A man offered some well-intended but not fully factual advice about whether you should make a down payment when you buy a car. Here’s what you need to know.
There’s a lot of advice online about how to go about buying a new or used car. But just because someone says something online with a lot of confidence doesn’t mean they’re right.
In a trending TikTok video, Brandon (@the1mr_gratitude) explains why he thinks people should never put money down toward buying a car. “It’s all a game,” he says.
A down payment is the upfront amount you pay toward large purchases like a car or house to reduce the loan you have to take out.
It’s very common to put a down payment toward a car, in fact, financial experts recommend you pay at least 20% of a new car’s purchase price upfront, and for a used car, at least 10%, according to NerdWallet.
“If you can’t afford the recommended amount, put down as much as you can without draining your savings or emergency funds. The more you can put down when buying a car, the better your financial position will be when you drive away,” NerdWallet reported.
Now, Brandon positions himself online as a dating and relationships expert (he even has a $99 guide for better dating) but also seems to offer plenty of car-related advice. We scoured his online profiles and couldn’t find any credentials that make him a relationship or car expert.
Brandon’s take: In the video, Brandon says you shouldn’t put money down toward a car because it’s a depreciating asset (though an asset nonetheless and a necessary transportation tool in many parts of the country).
Instead, he suggests you use the down payment money toward your first car payment. His logic is that that larger payment will go toward your principal loan amount, and you’ll be able to pay down the loan quicker.
Fact check: The logic on this one is flawed because in the early stages of paying off your loan, a larger portion of your payments go toward interest, not the principal amount, as he said.
Instead, you’d be better off going the traditional route and putting a large chunk of money as a downpayment since that will reduce how big of a loan you take out and possibly help you secure better interest rates. Both of these methods reduce how much you pay over time.
Brandon’s take: He claims that the down payment “never ever helps you out” because it goes to the dealership instead of the bank.
His logic is that if you don’t have the best credit score and want a $30,000 vehicle, you might only get approved for a $22,000 loan. He claims the extra $8,000 you pay out of pocket goes into the pockets of the dealership.
Fact check: Yes, if you don’t have the best credit score, a bank may limit how much they’re willing to loan you, so you may end up having to make a down payment to cover the remaining cost.
And while you pay that amount to the dealership, it’s not as insidious as Brandon is implying. The down payment goes toward the purchase price of the car. In the above case, it’s not like the $8,000 will be pure profit for the dealership. Part of the money goes toward the sale price, and the company makes a profit from whatever markup it places on the vehicle.
@the1mr_gratitude Never put money down on a car #advice #car #cars #dealership #money #game #foryou #inflation #finance ♬ original sound – Brandon☑️ Mr Gratitude
People in the comments section of Brandon’s videos had mixed reactions to his flawed advice.
“Ok. But without the down payment, the monthly payment may not be affordable,” the top comment read.
“I didn’t know not having a down payment was an option,” a person said.
“This guy is living in his own reality,” another added.
If you want to get a good deal on a car while making a down payment, a car buying consultant advises you to go for a no-down payment option, negotiate the best terms, and then let them know your down payment amount. He suggests that this way, they won’t artificially inflate the purchase price because of how much you are putting down.
The Daily Dot reached out to Brandon for comment via email.
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