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When you apply for a loan that involves the purchase of an item that has a substantial cost to it, often you are asked for a down payment. The amount will depend on the item you are purchasing, and what the normal standard for that particular item is, pertaining to the industry it comes under. For example, normally a down payment is expected when you are purchasing a house or some type of realty. In many cases when buying a vehicle the same is expected.
The initial amount of the down payment is subtracted from the amount being asked for the item, and then the balance is set up as a type of loan with terms of payments agreed to. The amount is usually a small percentage and is often used as a selling feature for the item. For example, car dealers will offer low down payment percentages, or sometimes even go without any money being put down at all as a selling incentive.
It is often difficult for individuals to come up with a down payment, and they will look for places to deal with that will offer them an item where they don't have to come up with this. Although it seems like a great deal, usually these establishments have an over-all higher interest rate. In the end the no down payment buyer ends up paying more for the item of purchase.
The purpose of the down payment is a form of protection for the seller or financer of the item purchased. In the case of realty it reduces the amount owed on the property. This means that if the institution who finances the mortgage has to foreclose on the property, they already have some of the money value of the property through the down payment. It will be easier for them to sell the property at less than the current market value so they can retrieve the balance owed to them plus costs.
Here at DebtCafe USA we often hear from clients, who because of their current financial situation when financing for an item only used a very small down payment or none at all. They now realize that this has added to the burden of their debt. Our professional debt resolution negotiators that have helped so many individuals who are debt laden become debt free totally understand these circumstances. Once you have filled in our no obligation information quote, these are all the details of your financial situation that you will be able to discuss with your personal loan negotiator.