A borrow may be able to get a lower rate in a loan if he or she offers to the lender a sizeable

A borrower may be able to get a lower interest rate on a loan if he or she offers the lender a sizeable down payment. A down payment is an upfront payment made by the borrower toward the total cost of the loan. It represents a percentage of the purchase price or loan amount and is paid in cash at the time of the transaction.

A larger down payment is often viewed favorably by lenders for several reasons:

1. Reduced Risk for the Lender: A substantial down payment reduces the amount of money the lender needs to provide, lowering their overall risk. If the borrower has more equity in the asset, it may be less likely that they will default on the loan.
2. Improved Loan-to-Value Ratio (LTV): The down payment affects the loan-to-value ratio, which is the ratio of the loan amount to the appraised value of the asset. A lower LTV is generally associated with less risk for the lender.
3. Increased Borrower Commitment: A significant down payment demonstrates the borrower's commitment to the purchase and their ability to save and manage finances responsibly.
4. Negotiating Power: A borrower with a substantial down payment may have more negotiating power when discussing loan terms with the lender. The lender may be more willing to offer a lower interest rate to secure the loan.