What a down payment changes
The down payment comes straight off the price, so you borrow less. That lowers the monthly payment and cuts the interest charged over the term, because interest is charged on a smaller balance every month.
A down payment also gives you equity in the car from day one. If the car is written off or you need to sell it early, you are less likely to owe more than it is worth.
Worked example
A £30,000 car with a £5,000 down payment leaves £25,000 to finance. At 7.5% over 60 months the payment is £500.95 a month, the total repaid is £30,056.92 and the interest is £5,056.92.
The £5,000 is 16.7% of the price. Paying £6,000 instead would cut the amount financed to £24,000 and reduce the payment and interest in proportion.
How much should you put down?
A deposit of at least 10% to 20% is a common rule of thumb. It keeps the loan below the car's value for longer and can help you qualify for a better rate.
Do not use money you need for emergencies. An emergency fund matters more than a slightly smaller car payment.
Inputs for the auto loan down payment calculator
Vehicle price
The agreed cash price of the car, before any deposit.
Down payment
The cash or trade-in value you pay upfront.
Interest rate (nominal, not APR)
The yearly rate before monthly compounding, from your finance quote.
Term
How many months you will take to repay the loan.
CALCULATOR QUESTIONS
Auto loan calculator with down payment questions
Is a bigger down payment always better?
It lowers the payment and the interest, but only if the money is genuinely spare. Keep an emergency fund first.
Can a trade-in count as the down payment?
Yes, as long as any finance on the old car is settled. The net equity is the part that counts.
Does a down payment change the interest rate?
Not directly. It changes the amount borrowed. A lower loan-to-value can help you qualify for a better rate, but the rate itself is set by the lender.
What happens if my down payment is more than the price?
The calculator refuses it. A down payment at or above the price means there is no loan to calculate.