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General information only: This guide does not consider your objectives, financial situation or needs and is not financial advice. Credit eligibility, rates and terms depend on the lender's assessment.
A deposit reduces the amount borrowed
A deposit is the portion of the vehicle price paid from your own funds. A larger deposit reduces the principal financed and generally reduces the scheduled repayment and total interest, all else being equal.
There is no universal deposit requirement. Lender policy can depend on the applicant, vehicle, price and loan structure.
Remember the other purchase costs
Do not use all available cash for the deposit without allowing for registration, stamp duty, insurance, accessories and ongoing running costs. Some costs may be paid upfront and others may be financed, subject to lender policy.
- Calculate the drive-away cost
- Keep an emergency buffer
- Compare financing costs with and without added expenses
- Avoid borrowing more than the vehicle is worth where possible
A deposit is not a substitute for affordability
A strong deposit can improve the structure but does not make unsuitable repayments sustainable. Base the decision on verified income, regular expenses, existing debts and room for changes in circumstances.
Sources and further reading
Primary sources checked when this guide was reviewed:
Read BaseRate's editorial policy and calculator methodology.
