What is the difference between these two things?
- $100k loan with $20k down payment to buy a $100k thing
- $80k loan with $0 down payment to buy a $100k thing
They seem effectively identical. But in that case, why are down payments even regarded as a thing?
Edit for clarification: In situation #2, you are paying $20k yourself without the involvement of the lender, so you just need an additional $80k to cover the remainder of the $100k. So you are paying $100k in both situations regardless, but in the first, you are making a $20k down payment as part of the loan agreement, and in the second case, you are paying the $20k independent of the loan agreement. In both situations, you have the $20k to spend, but it's just a matter of whether you spend it as the down payment or spend it independently of the loan and just get a lesser loan.