Down payment for your car loan is the amount that is paid initially when you buy your car with your car loan. It is the amount that is paid by you with your savings or earnings. The remaining amount after your down payment is the loan amount that is issued by your bank or the Non-Banking Financial Company (NBFC).
For example, if you are buying a car that costs Rs.10 lakhs and you have Rs.1 lakh in your bank account, then you can make a down payment of Rs.1 lakh and the bank will issue Rs.9 lakhs as your car loan amount. You will then be charged an interest on only the Rs.9 lakhs which is considered your loan amount. So, the higher the down payment, the lower the loan amount and your outflow of money towards the interest charged will then be low as well.
So, it is always advisable to make a higher down payment when applying for a car loan. This will reduce the money paid towards the interest charged on the loan amount.
To apply for a car loan, click here.