Car Down Payment Impact Calculator

How each option is priced

Both columns use the same price, rate and term; only the deposit changes. The amount borrowed is the price less the deposit, and that goes through the standard amortising payment:

loan    = price - down payment
r       = annual rate / 100 / 12
payment = loan x r x (1+r)^n / ((1+r)^n - 1)

With the defaults - $30,000, 6%, 60 months - $3,000 down leaves $27,000 borrowed at $521.99 a month, and $6,000 down leaves $24,000 at $463.99. The extra $3,000 buys a $58.00 cut in the payment.

What the extra deposit is worth

Of that $58, fifty dollars is simply the same $3,000 spread over 60 months. The other $8 a month is interest you no longer pay: $480 over the full term, or about $160 for every $1,000 you put down. That is a 6% return, because avoiding interest earns exactly the loan rate.

• At 6% over 60 months, each $1,000 down takes about $19.33 off the payment.
• The rate itself does not change, but lenders often price a thin deposit higher, so a real quote may improve by more than this shows.
• A deposit is the cheapest way out of negative equity, where the loan balance exceeds what the car would sell for.

Frequently asked questions