Finance Calculator
Car Down Payment Calculator
See exactly how your down payment changes your monthly payment and total interest — and how much you'd need to hit a target monthly budget.
Loan Setup
Enter a target to see the down payment required.
Monthly Payment
with $7,000 (20%) down
Down Payment
$7,000
Loan Amount
$28,000
Total Interest
$4,880
For Target Payment
—
The 20% rule
Putting 20% down on a new car (10% used) keeps you from going underwater and meaningfully cuts total interest.
How it works.
Your down payment does three things at once: it shrinks the amount you finance, lowers your monthly payment, and cuts the total interest you'll pay over the life of the loan. The calculator also works in reverse — enter a target monthly payment and it tells you the down payment needed to hit it.
Why 20% is the benchmark
A new car can lose about 20% of its value in the first year. If you finance the whole thing with little down, you're immediately underwater — you owe more than the car is worth — and you stay there for a year or two. A 20% down payment on a new car (10% on a used one) roughly matches that first-year drop, so you keep pace with depreciation instead of falling behind. That protects you if the car is totaled early or you need to sell sooner than planned.
How much interest a bigger down payment saves
On a $35,000 car at 6.5% over 60 months, going from 10% down to 20% down cuts the loan by $3,500 — and saves roughly $600 in interest while trimming about $68 off the monthly payment. The higher your rate, the more each extra dollar down is worth. Try both figures in the calculator to see the difference for your exact loan.
When a smaller down payment makes sense
If a manufacturer is offering a promotional 0–2% APR, financing more and keeping your cash can be the smarter move — the loan is nearly free money. The same logic applies if putting more down would wipe out your emergency fund. The one combination to avoid is little-to-no down payment stretched over a long 72- or 84-month term: that's the fastest route to being deeply underwater.
Frequently asked questions.
How much should I put down on a car?
Aim for 20% on a new car and at least 10% on a used one. This offsets the fast early depreciation so you don't owe more than the car is worth, and it lowers both your payment and total interest.
Is a bigger down payment always better?
It lowers your loan cost, but don't drain your emergency fund. If your loan rate is very low (a subsidized new-car rate), keeping cash for higher-return uses can make sense — just avoid a 0% down, long-term combo.
Does a down payment lower my interest rate?
Sometimes. A larger down payment reduces the lender's risk (lower loan-to-value), which can qualify you for a slightly better rate in addition to reducing the amount you finance.
What is the 20/4/10 rule?
A simple affordability guideline: put at least 20% down, finance for no more than 4 years, and keep total vehicle costs (payment plus insurance) under 10% of your gross income. It's conservative, but following it almost guarantees you never end up underwater or house-poor over a car.
Can I put too much down on a car?
You can. Draining your emergency fund to make a bigger down payment is risky — if you lose income, you still need cash more than a slightly smaller loan. Once you're past 20% and safely above being underwater, extra cash may work harder in savings or paying off higher-interest debt.
Can I use my trade-in as the down payment?
Yes. A trade-in's equity counts toward your down payment and, in most states, also lowers the sales tax on the new car. Just make sure you actually have positive equity — if you still owe more than the trade is worth, that negative equity gets added to the new loan instead.