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Chapter 8: Problem 14

What is a down payment?

Short Answer

Expert verified
A down payment is typically the initial upfront part of the total amount due for buying expensive goods or services, such as a car or a house.

Step by step solution

01

Understanding the term 'Down payment'

A down payment is a type of payment, made in the context of buying expensive goods or services. It commonly known in financial contexts where it refers to the initial upfront part of the total amount due that is made when you purchase expensive items like a house or a car.
02

Illustration with Example

For instance, when shopping for a car worth $20,000, one might make a down payment of $5,000 on the vehicle - this means they give the seller $5,000 up front, and then continue to complete the payment in subsequent regular installments until the total amount of $20,000 is fully paid.

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