why do lenders require down payments 
downpayments reduce the risk for lenders not only do they reduce the amount of money that needs to be lent out by acting as the cost of entry for a loan but a downpayment can also be used to prove that the borrower is serious about a loan the bottom linea down payment is a sum a buyer pays upfront when purchasing a home or car and is a percentage of the total purchase price the higher the down payment the less the buyer will need to borrow to complete the transaction the lower their monthly payments and the less they ll pay in interest over the long term 