Car Down Payment Calculator

How it works

The amount to cover is the price plus sales tax and any fees rolled into the loan, less your trade-in equity. A down payment covers part of it and the loan covers the rest.

A target monthly payment, at your APR and term, can repay a loan of a certain size: the present value of that stream of payments. The down payment needed is whatever the amount to cover exceeds that loan by. If the loan the target supports is already larger, no down payment is needed and the payment shown is the lower one you would actually pay.

The table shows the payment and total interest at each down payment you list. Every dollar put down is a dollar not borrowed, so the interest saved is proportional to the down payment.

A common rule of thumb for car purchases, often called 20/4/10, suggests about 20% down, a loan of no more than four years, and total car costs under 10% of gross income. The calculator compares your down payment plus trade-in with the percentage you set; it is a guideline, not a requirement of any lender.

Formula

amount to cover = price × (1 + tax) + fees − trade-in
r = APR ÷ 12      n = months
loan the target supports = target × (1 − (1 + r)^−n) ÷ r      (= target × n when r = 0)
down payment needed = max(0, amount to cover − loan the target supports)
payment at down D = (amount to cover − D) × r ÷ (1 − (1 + r)^−n)
interest saved by D = D × (n × r ÷ (1 − (1 + r)^−n) − 1)
guideline = price × guideline %

Example

A $30,000 car with 7% sales tax and $800 in financed fees needs $32,900 covered. At 7% APR over 60 months, a $500 payment repays a loan of $25,251.00, so the down payment needed is $7,649.00, or 25.5% of the price. That meets the 20% guideline of $6,000. Total interest on that loan is $4,749.00.

With nothing down the payment would be $651.46 and the interest $6,187.57. Putting $6,000 down lowers the payment to $532.65 and saves $1,128.43 in interest.

Assumptions and limitations

• The APR is fixed and the loan is repaid in equal monthly payments. The target payment is principal and interest only.
• Sales tax is applied to the full price before the trade-in. Many states tax only the price net of the trade-in; enter the rate and fees that apply to you.
• The 20% figure is a rule of thumb from personal-finance guidance, not a lender requirement; it is an editable input.
• Insurance, fuel and maintenance, which the 10% part of 20/4/10 includes, are not modelled.
• This is an estimate, not financial advice.

Frequently asked questions