## Car Down Payment Calculator

Car Down Payment calculator can be used to calculate the initial cash outflow when the person purchases any vehicle on loan as not all purchases are financed 100% by the banks or the financial institution.

#### Car Down Payment Calculator

[ P + C – D ] x [ 1 – L ]

- P is the Price of the Vehicle
- C is the charges if any that are required to be paid due to purchase of vehicle
- D is the discount provided or any rebate
- L is the percentage of loan financed by bank

### About Car Down Payment Calculator

Most of the vehicle purchases that are purchased are financed by the bank as most of the buyers don’t prefer to pay cash upfront and the reason for the same could be adequate savings not available, or earnings are not sufficient or for tax benefits or for reducing burden. It may be any reason for purchasing a vehicle on loan, but not all of the purchases are financed 100% by the bank. This car loan down payment calculator can be used to calculate what the initial amount will be the borrower would be required to pay when the purchase is financed through any bank or financial institution. The borrower can then compare across tenure and what is flexible for him to pay upfront.

The formula for calculating car loan down payment is per below:

**Down Payment = [ P + C – D ] * [ 1 – L ]**

Wherein,

- P is the price of the vehicle.
- C is the charges if any that are required to be paid due to the purchase of the vehicle.
- D is the discount provided or any rebate.
- L is the percentage of the loan financed by the bank.

### How to Calculate Car Down Payment?

One needs to follow the below steps in order to calculate the monthly installment amounts.

**Step #1:** First of all, determine the price of the vehicle inclusive of all charges.

**Step #2: **Add any additional charges if applicable, that could be additional parts purchased by the borrower, etc.

**Step #3: **Deduct any rebate or discount provided by the dealer to the customer.

**Step #4: **Take sum of values from step 1 and step 2 and deduct the value from step 3.

**Step #5: **Check the percentage of the loan financed by the bank.

**Step #6: **Now multiply the value arrived in step 4 by percentage in step 5.

**Step #7: **Now deduct the value arrived in step 4 by value arrived in step 6 which shall be the down payment.

### Car Down Payment Calculator Example

#### Example #1

Mr. XYZ was looking to purchase a vehicle long back and was not able to purchase as the vehicles were out of his budget. He recently learned about a new electric vehicle launched by the renowned company and he was excited to purchase the same. The price it was launched was $10,000. He went into the showroom and enquired about the same, where he came to know that the price was ex-showroom price and road charges and insurance would be extra.

Road tax will be charged at 3% and Insurance cost will be 4.5% and since again due to these costs as well, the price was out of this budget. Later, he decided to purchase the same on loan and the bank agreed to finance it to the tune 80% and rest would be an upfront payment. Further, he also wanted to purchase additional accessories of $850 which shall be included in calculating the loan amount. He was given $50 as a discount by the dealer due to the launch offer.

Based on the given information, you are required to calculate the down payment for a car loan that is required to be made by Mr. XYZ.

**Solution:**

We need to calculate the cost price of the vehicle first.

- = $10,000 + $300 + $450
- = $10,750

Now, we can use the below formula to calculate the car down payment to be made by Mr. XYZ.

**Down Payment = [ P + C – D ] * [ 1 – L ]**

- Additional Charges of accessories will be $850, and the discount provided by the dealer is $50.
- The bank is financing the vehicle to the tune of 80%.

- = [ $10,750 + $850 – $50 ] *[ 1 – 80% ]
- = $11,550 *20%
**= $2,310**

Therefore, the down payment that Mr. XYZ is required to be made is $2,310.

#### Example #2

Mrs. Kirti is interested in purchasing a luxury car that costs around $50,000 and is ex-showroom price. The road tax and insurance cost both are 6% of the cost price. There is no discount on the same as it’s a luxury car and no additional charges. Kirti wants the purchased to be financed by the bank to the tune of 95% and the bank has demanded processing charges for the same which is 2% of the loan amount and she is ready to pay the balance amount as a down payment.

Based on the given information, you are required to calculate the car down payment that shall be made by Mrs. Kirti and also calculate the total cash outflow that she will make during the initial stage.

**Solution:**

We need to calculate the cost price of the car first.

- =$50,000 + $3,000 + $3,000
- = $56,000

Now, we can use the below formula to calculate the car down payment to be made by Mr. Kirti.

**Down Payment = [ P + C – D ] * [ 1 – L ]**

- The bank is financing the vehicle to the tune of 95%.

** **

- = [ $56,000 + 0 – 0 ] * [ 1 – 95% ]
- = $56,000 x 5%
**= $2,800**

Therefore, the down payment that Mr. Kirti is required to be made is $2,800.

- The processing charges are 2% which would be calculated on loan amount.

- = ($56,000 – $2,800) *2%
- = $53,200 * 2%
**= $1,064**

#### Total Cash Outflow:

- =$1,064 + $2,800
**=$3,864**

Therefore, the total cash outflow is $3,864.

### Conclusion

A car down payment calculator as discussed can be used to calculate the amount of initial down payment that is required to be made by the customer and it would be convenient for him to know whether the same can be paid by him or he wants to reduce the down payment.

### Recommended Articles

This has been a guide to the Car Down Payment Calculator. Here we provide you the calculator that is used to calculate the down payment for the car loan along with some examples. You may also take a look at the following useful articles –