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First car · Lesson 6 of 14
The down payment on a car loan
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Cash down reduces the amount financed. It is not a monthly cost.
Where it goes
The amount financed is price, minus down payment, minus trade-in, plus sales tax on the price after trade-in. A larger down payment shrinks that loan and the principal-and-interest payment.
The down payment does not reduce insurance, fuel, or registration. Those stay as you typed them.
A down payment larger than the car
If down payment and trade-in cover the price and the tax, the loan is zero. You still see ownership costs. The payoff date for the loan is absent because nothing is financed.
The balance chart is the loan. A zero loan has nothing to draw down.
Do not type the down payment as a debt
Cash you already paid is not a balance. The debt list is for amounts you still owe. The car loan, if you finance it, is either in the car calculator or in the debt list, not both. The month has a switch for that.
This explains how WiseCalculator treats the numbers you type. It is not a lender’s offer and it is not advice for your loan.
More in Car
- Trade-in and the amount financedTrade-in lowers the price before tax and lowers the loan. It is a dollar credit, not a monthly payment.
- Car insurance in the monthly totalInsurance is a monthly amount you type. It is added in full and it does not end when the loan ends.
- Registration spread across the yearRegistration is a yearly amount divided by twelve. It is an ownership cost, not part of the loan.