How do I calculate down payment?

The down payment is an upfront initial lump sum amount paid by you towards the cost of an asset purchased on credit. It is usually a percentage of the total asset value. The calculation includes the following inputs:

• Total Cost of the Asset: This is the price you will pay to purchase the asset.
• Down Payment Percentage: It is the portion of the total purchase price that you pay upfront, typically in cash, when buying an asset like a house, car, or other large purchase. Typically, it ranges from 10-20%.
• Interest Rate: The annual rate of interest charged on the loan by the financial institution.
• Processing Fee: A one-time fee charged by the lender to process the loan application, which is usually 1-4% of loan amount, depending upon the financial institution’s policies.
• Tenure: The time period over which you will repay the loan, which can typically be between 5-30 years.

For example, if you plan to purchase a house worth ₹50 lakhs, and your selected down payment percentage is 20%, the rate of interest is 9%, the processing fee is 3%, and the tenure is 20 years, the down payment amount will be ₹10,00,000 and the total cash needed (DP + PF) will be ₹11,20,000. Use an online down payment calculator to know the discount amount.