What this scenario helps you see
A bigger deposit means less principal and less interest, but spending every spare dollar can leave you stuck with the first surprise repair. Decide how much cash you want left after the purchase before you decide that more down is better.
Price, amount financed and total payments are three different numbers. This example finances $20,000, not the full $25,000. Taxes, title, add-on products and negative trade equity all raise the principal if they're rolled into the loan.
Try a shorter term with the same deposit, then try extra payments on the original term. Extra payments give you flexibility, but check that your contract applies them to principal without a charge.
Test a different rate
| Annual interest | Monthly payment | Total interest |
|---|---|---|
| 5% | $377.42 | $2,645.52 |
| 7% | $396.02 | $3,761.48 |
| 9% | $415.17 | $4,909.99 |
Method and limitations
The model uses fixed monthly amortization: M = P × r ÷ (1 − (1 + r)^−n), with principal P, monthly rate r, and n payments. At zero interest, payment is P ÷ n. Interest and payments are rounded monthly, and the last payment reconciles the balance. See the complete loan methodology for assumptions and sources.
Daily-interest contracts, prepaid finance charges, late payments, and lender rules can produce a different result. This page is an educational example, not a rate quote or approval. CFPB explains loan terminology and disclosures.
Questions about this example
Is the loan amount $25,000 in this example?
No. The car costs $25,000 and the deposit is $5,000, so you start with $20,000 financed. Fees and taxes you roll in would add to that.
How does another $1,000 down change the payment?
It lowers the financed balance by $1,000 if everything else stays the same. Save the current result as scenario A, raise the deposit, and compare the payment and interest.
Should I finance taxes and fees on a $25,000 car?
Financing them raises what you pay in interest, so compare your monthly cash flow with the cash you'd have left. Use the financed-fee input only for charges that are really added to the loan.