What the down payment changes — and what it doesn't
A down payment does not change the interest rate. It changes the amount financed, which is the balance the rate is charged on. A smaller balance means a smaller payment and less interest, on every term.
A $30,000 car with different down payments
| Down payment | Amount financed | Monthly payment | Total interest |
|---|---|---|---|
| $0 | $30,000 | $594.04 | $5,642.16 |
| $1,500 | $28,500 | $564.33 | $5,360.05 |
| $3,000 | $27,000 | $534.63 | $5,077.94 |
| $6,000 | $24,000 | $475.23 | $4,513.73 |
| $9,000 | $21,000 | $415.83 | $3,949.51 |
Every $1,000 counts the same
At 7 % over 60 months, each $1,000 you put down takes $19.80 off the monthly payment and $188.07 off the total interest. The effect is proportional: $5,000 down saves five times as much as $1,000.
Down payment or longer term?
Both lower the payment, but in opposite directions for your total cost. With nothing down over 72 months, the payment is $511.47 and the interest $6,826. Reaching that same payment over 60 months takes about $4,170 down — and the interest drops to $4,858.
Whether that trade makes sense depends on what else the cash is for. The calculator shows the numbers; the choice is yours. Try your own on the calculator.