Cash down: a worked example
Two cars have the same book value, the same initial asking price, and the same illustrative lender advance. The difference is what you paid to buy each car.
This online reference uses the worked example in our current wholesale guide. A downloadable PDF is not yet available.
Start with the total price and the advance#
Cash down = sale price + tax, tag, and fees − lender advance
Use the lender’s actual approved advance for the specific deal. The 115% figure below is illustrative, not a lender program or an approval promise.
Same advance. Two different buying costs.#
Assume a $9,000 JD Power Clean Trade-In value, a $10,350 advance, and $1,100 in tax, tag, and fees. Both cars initially retail for $11,995.
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| The number | Bought at $7,000 | Bought at $9,000 |
|---|---|---|
| Acquisition cost | $7,000 | $9,000 |
| JD Power Clean Trade-In | $9,000 | $9,000 |
| Clean trade equity at purchase | +$2,000 | $0 |
| Initial retail asking price | $11,995 | $11,995 |
| Illustrative tax, tag, and fees | $1,100 | $1,100 |
| Price plus tax, tag, and fees | $13,095 | $13,095 |
| Illustrative advance: 115% of $9,000 | $10,350 | $10,350 |
| Cash down at initial asking price | $2,745 | $2,745 |
| Sale price holding exactly $3,000 gross | $10,000 | $12,000 |
| Cash down at that sale price | $750 | $2,750 |
The room comes from what you paid#
The advance never changes in this example. At a $7,000 acquisition cost, a $10,000 sale holds $3,000 gross. With the assumed fees and advance, cash down is $10,000 + $1,100 − $10,350 = $750.
At a $9,000 acquisition cost, a $12,000 sale holds exactly $3,000 gross. Cash down is $12,000 + $1,100 − $10,350 = $2,750. Selling that car at $11,995 would hold $2,995 gross.