Down Payment

What is a down payment?

Down Payment Definition: A down payment refers to a lump sum amount that a buyer makes when purchasing a home, property, or large asset. Generally, the down payment is deducted from the total price of the item, the balance of which is to be paid in installments, usually with interest.

The larger the down payment, the less the buyer will have to finance, which often results in benefits to the lender and the borrower. If a high down payment is required, this may prompt the buyer to take a loan to fund this amount. A down payment is common in the purchase of a car or home.

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