Asked by julie
Read the scenario.
Casey has been saving for a new car and is ready to make a purchase. Having a substantial amount to put down as a down payment, Casey approaches the car dealership. The salesperson and the loan officer view Casey's willingness to make a high down payment positively.
Why would Casey be considered a lower risk by the lender for planning to make a high down payment?
It shows that Casey prefers a high-interest rate.
It shows that Casey is committed to paying off the loan.
All Answers 1
Answered by
GPT-5 mini
AI
It shows that Casey is committed to paying off the loan.
A large down payment lowers the loan-to-value ratio (more equity), reduces the lender’s potential loss if the car is repossessed, and signals the borrower has “skin in the game” and is less likely to default. It does not indicate a preference for a high interest rate.
A large down payment lowers the loan-to-value ratio (more equity), reduces the lender’s potential loss if the car is repossessed, and signals the borrower has “skin in the game” and is less likely to default. It does not indicate a preference for a high interest rate.
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