Start with $5,000 down
These defaults use a 6.5% sales-tax assumption, $700 in fees, $186/month insurance, 1,000 miles/month, 25 MPG and a $900/year maintenance reserve.
$5,000-down examples at 7% APR
These examples isolate the loan math. Taxes, registration, dealer fees, insurance, fuel and maintenance can increase the real monthly cost.
| Scenario | Amount financed | APR | Term | Payment | Total interest |
|---|---|---|---|---|---|
| $25,000 car | $20,000 | 7.0% | 60 mo | $396/mo | $3,761 |
| $35,000 car | $30,000 | 7.0% | 60 mo | $594/mo | $5,642 |
| $45,000 car | $40,000 | 7.0% | 60 mo | $792/mo | $7,523 |
| $45,000 car · 72 months | $40,000 | 7.0% | 72 mo | $682/mo | $9,101 |
The percentage matters as much as the dollar amount.
Five thousand dollars is 20% of a $25,000 purchase but only 10% of a $50,000 purchase. The remaining financed balance determines the payment once the APR and term are set.
Taxes and fees can consume part of the apparent benefit.
If the out-the-door total is several thousand dollars above the vehicle price, a $5,000 down payment may reduce the final loan by less than you expect from looking at the sticker alone.
FAQ
Does $5,000 down reduce the loan by exactly $5,000?
Generally it reduces the cash amount that must be financed by $5,000, but taxes, fees, trade equity, add-ons and other deal items determine the final financed balance.
Is $5,000 enough to put down on a car?
It depends on the vehicle price, your cash reserves, lender terms and the rest of the deal. Compare the resulting loan balance and payment rather than judging the dollar amount alone.
Can a trade-in count like a down payment?
Positive trade equity can reduce the amount you need to finance. If you owe more than the trade is worth, negative equity can instead increase the new loan balance.