Car down payment savings calculator

Work out how much to save each month to reach a car down payment — or how long it takes at a set amount. Real high-yield rates, and the depreciation reason 20% is the target.

How the math works

The target is the easy part: multiply the car price by the down payment percentage. A 20% goal on a $50,080 car is $10,016. The rest is a savings problem, not a loan problem.

Your monthly savings form an ordinary annuity, and any money already set aside compounds alongside them. The future value of both, set equal to the target, is the standard annuity formula:

Here FV is the down payment target, PV is what you have saved so far, PMT is the monthly amount, i is the monthly rate (the APY divided by 12), and t is the number of months. To find the monthly amount, the calculator solves for PMT. To find the timeline, it solves for t. It assumes monthly compounding, which is the convention for savings accounts.

Worked example

Take the average new vehicle. In September 2025 the Kelley Blue Book average transaction price was $50,080, the first month it crossed $50,000. A 20% down payment on that is $10,016.

Say you want it in two years and you park the money in a high-yield savings account paying 4.00% APY. Starting from zero, the calculator asks for $401.56 a month. Over 24 months that is $9,637.38 out of your own pocket, and the account chips in $378.62 in interest to close the gap.

Leave the same money in a checking account at 0% and the monthly climbs to $417.33 — the account earns nothing, so every dollar of the target comes from you. On a two-year horizon the rate is worth about $16 a month. On the car itself, that is roughly one tank of gas.

When this calculator is wrong

This calculator tells you how to reach a number. It does not tell you whether the number is right, and there are a few ways the plan drifts from reality.

• The 20% target exists because of depreciation, and depreciation does not wait for you. A new car loses roughly 20% of its value in the first year and about 60% by year five. Put less than 20% down and the loan starts out larger than the car is worth. In the fourth quarter of 2024, 24.9% of trade-ins toward a new car carried negative equity, at an average of $6,838 owed above the car's value. A full down payment is the cheapest insurance against joining that group.
• It assumes the price holds still. New-car prices rose for more than a year to reach that $50,080 average. If you are saving for three years against a sticker that keeps climbing, the down payment you need is a moving target, and a longer horizon works against you. Re-run the numbers on the current price, not last year's.
• The rate you type in has to be real. The 4.00% default is what online high-yield accounts pay. Money sitting in a checking account or a brick-and-mortar bank's "savings" product earns closer to the FDIC national average of 0.41% — about a tenth as much. Over a short car-savings horizon the interest is small either way, but there is no reason to leave it on the table.
• It ignores the rest of the deal. The down payment is not the only cash you need at the dealership. Sales tax, title, registration, and the first insurance payment land on top. The down payment is the part you can plan for; budget a cushion for the rest.

What to do with the result

Once you have the monthly number, the practical move is to make it automatic and put it somewhere that pays. Set a standing transfer for the day after payday into a high-yield savings account, not the checking account the car fund would otherwise erode from. For a car you plan to buy inside three years, this is cash, and cash belongs in a savings account, not the market — a downturn the month before you buy is not a risk worth taking to earn a few percent more.

If the monthly figure is more than you can set aside, you have three levers: a cheaper car, a longer timeline, or a smaller down payment percentage. The first two cost you nothing but patience. The third one costs you at the far end, in a larger loan on a faster-depreciating asset. Pull the first two before the third.

Common questions

How much should I put down on a car?

The common rule is 20% for a new car and 10% for a used one. The 20% figure is not arbitrary: a new car loses about 20% of its value in the first year, so a 20% down payment roughly keeps what you owe from exceeding what the car is worth. Auto loans carry no PMI, so the target is about avoiding negative equity, not dropping an insurance charge.

Where should I keep a car down payment while I save?

A high-yield savings account. The money is needed within a few years, which rules out the stock market, and the yield gap between an online high-yield account (around 4%) and a typical bank "savings" account (the FDIC average is 0.41%) is roughly tenfold. Keep it separate from your everyday checking so it does not get spent by accident.

Does the interest on my savings really matter for a car down payment?

Less than you might hope. On a two-year, $10,016 target, a 4% account adds about $379 versus nothing in a 0% account — real money, but not the thing that decides the plan. Over a car-savings horizon, how much you set aside each month matters far more than the rate. The rate matters on decade-long goals, not two-year ones.

Should I make a bigger down payment or keep the cash?

If the extra cash would otherwise sit in a low-yield account, a bigger down payment usually wins, because it shrinks a loan you are paying interest on and keeps you out of negative equity. If you would be draining an emergency fund to do it, stop at the point that leaves the emergency fund intact. A down payment is not worth becoming cash-poor over.