How much down payment for a truck you need has no single answer, because the lender sets it on approved credit, and some approvals need nothing down at all. What a down payment does is the part you control. It lowers the amount you borrow, which lowers the payment, the interest and the risk of owing more than the truck is worth. The quickest way to see what a lender wants from you is to apply for financing and read the terms you are offered; every rate and term is on approved credit, and nothing is approved until the lender says so.
If your current truck is part of the plan, start by seeing what it is worth with our instant cash offer. We honour the instant cash offer; the number you get online is the number we stand behind when the vehicle matches what you told us.
Key Takeaways
- There is no set minimum. The lender decides what it needs on approved credit. The Financial Consumer Agency of Canada (FCAC) lists "if possible, put a down payment" among its tips to reduce the risks of a car loan.
- A down payment cuts the payment and the interest in proportion. In our worked example at an illustrative 7 percent over 84 months, 20 percent down lowers both the monthly payment and the total interest by a fifth, because the amount borrowed falls by a fifth. That is an example, not a quote.
- Zero down starts you behind. In the same example, one year in, the zero down loan still owes about 89 percent of the price, against about 71 percent with 20 percent down.
- A trade with equity works like cash down, and in Manitoba a qualifying trade also lowers the retail sales tax, when it is of the same general kind and you own it when the Transfer of Ownership Document is completed. Cash down does not lower the tax.
- Keep a cushion before you write a bigger cheque. Winter tires, insurance and fuel come due whatever the loan looks like.
What a Down Payment Does to the Loan
Every dollar down is a dollar you do not borrow, and four things follow from that.
The amount financed falls. Interest is charged on the balance you owe, so a smaller balance costs less from the first payment.
The payment falls, or the term can shrink. FCAC's tip list also says "choose the shortest term loan you're able to afford", and money down can make a shorter term fit.
You start with equity. FCAC defines the problem plainly: "You have "negative equity" when your car is worth less than the amount you owe on your car loan." It also warns that "After 1 year, your new car may be worth 25% less than the price you paid." Money down is the buffer between those two lines.
It heads off the trade in trap. If you need to trade early, a loan that started with equity is less likely to leave a shortfall to roll into the next one. Our guide to trading in with money owing explains how a payout works in Manitoba.
A Worked Example: Zero, 10 and 20 Percent Down
Every figure in this section is an example, not a quote. The 7 percent rate is illustrative, not a current rate or an offer, the term is 84 months, and taxes and fees are left out to keep the arithmetic readable. Say the truck comes to $50,000, an example figure and not the price of any particular truck. On a real truck the price is less any applicable incentives, so check our current pricing here before you put in your own numbers. The payments use the standard loan payment formula that loan calculators use.
| Down payment (example, not a quote) | Monthly payment | Total interest |
|---|---|---|
| Zero down, borrow $50,000 | $754.63 | about $13,389 |
| 10 percent, $5,000 down, borrow $45,000 | $679.17 | about $12,050 |
| 20 percent, $10,000 down, borrow $40,000 | $603.70 | about $10,711 |
Putting 20 percent down, $10,000 here, lowers the payment by $150.93 a month and the total interest by about $2,678. Both fall by a fifth because the amount borrowed falls by a fifth. The $50,000 is an example figure, and a real truck's price is less any applicable incentives.
Now look one year in. After 12 payments, the zero down loan still owes about $44,260, which is about 89 percent of the $50,000. With 20 percent down the balance is about $35,410, about 71 percent. If the truck were worth 25 percent less after a year, the figure FCAC uses for a new car, it would be worth $37,500. The zero down buyer would owe about $6,760 more than that; the 20 percent down buyer would owe about $2,090 less.
On a real purchase in Manitoba, GST and the 7 percent retail sales tax are added. Manitoba Finance's Bulletin No. 012, Motor Vehicle and Trailer Dealers, has the RST charged on the net selling price, the amount after any discount or qualifying trade, so a $10,000 qualifying trade on the same $50,000 truck would mean RST on $40,000, which is $700 less tax. Cash down is a payment, not a deduction from the selling price, so it does not change the RST. As with every figure in this example, a real truck's selling price is less any applicable incentives.
When Zero Down Is Offered, and What It Costs
A lender may approve a truck loan with nothing down, on approved credit, depending on your credit, the truck and the term. Whether it fits your file is something only the lender's answer tells you.
What it costs is in the example. Over 84 months, zero down pays about 25 percent more interest than 20 percent down, about $2,678 more on these figures, and starts the loan with the balance above what the truck may be worth. That gap matters most if you trade early or the truck is written off; FCAC notes that after a total loss, "What you get from your insurance company may not cover what you still owe on your car loan." Zero down can still be the right call when the cash has a better job, such as an emergency fund you would otherwise empty.
Your Trade as the Down Payment
For most Manitoba buyers the down payment is already sitting in the yard. If your truck is worth more than you owe on it, that difference works like cash down. Our guide to trade in value in Manitoba covers what moves the number, and the instant cash offer gives you a figure before you shop.
If you still owe on it, we take trades with money still owing; the balance is handled as part of the deal. If the vehicle is worth less than what is owed, the difference still has to be paid, or it may be added to the amount financed on a new loan, increasing the amount borrowed and potentially the total cost of borrowing. FCAC's tip list says "avoid trading in your car if you're in negative equity".
The Manitoba RST Credit on a Trade
A trade can save tax that cash cannot. Manitoba Finance's Bulletin No. 012 says that when you trade a vehicle of "the same general kind", the RST applies to the net difference payable. Vehicles required to be registered under The Drivers and Vehicles Act count as the same general kind, so a car traded on a truck qualifies. The bulletin also requires that you own the trade at the time of trade in, meaning when the Transfer of Ownership Document is completed; if you do not, RST is charged on the full selling price before the trade allowance comes off.
That condition catches people. If the truck is registered to a spouse, a parent or the farm company, or it is leased and owned by the leasing company, ask our team how the rule applies to you before you count on the saving. Our guide to taxes when buying a vehicle in Manitoba covers the rest of the bill.
A Bigger Down Payment or Cash in the Bank?
A bigger down payment saves interest, but an empty bank account in November is its own risk.
Set the cushion first. Price your own winter tires for the truck you are buying, your Autopac renewal, and your fuel for the coldest month from your last few fill ups. That total is what stays in the bank. We are a participating retailer in the MPI Winter Tire Program; if you qualify, you can apply for the program's financing with us, and Manitoba Public Insurance sets who is eligible.
Then put down what is left over. Past the cushion, more down usually beats cash in savings when the loan rate is higher than what the savings earn. Our advice: compare the two rates before you decide.
Match it to how your income lands. A grain or cattle operation may see most of its money after harvest or when the calves sell. If you need the truck before the cheque arrives, a smaller down payment now and an extra payment later can do a similar job, if your contract allows extra payments without a charge; read the prepayment terms before you sign.
Or borrow less by buying differently. If the down payment you can manage leaves the payment too high, a truck from our used inventory can shrink the amount financed more than any cheque.
FAQs
How much down payment for a truck do you need?
There is no single required amount. The lender sets what it needs on approved credit, based on your credit, the truck and the term, and some approvals need nothing down. The Financial Consumer Agency of Canada's tip is "if possible, put a down payment", and in our worked example 20 percent down cut both the payment and the total interest by a fifth.
Can I buy a truck with zero down?
Sometimes, on approved credit; whether a lender approves it depends on your credit, the truck and the term. Zero down means you borrow the whole amount, so you pay more interest and can start the loan owing more than the truck is worth. In our worked example, one year in, the zero down loan still owed about 89 percent of the price.
Can my trade in be my down payment?
Yes, when the truck is worth more than what you owe on it; that difference works like cash down. We take trades with money still owing; the balance is handled as part of the deal. If the vehicle is worth less than what is owed, the difference still has to be paid, or it may be added to the amount financed on a new loan, increasing the amount borrowed and potentially the total cost of borrowing.
Does a trade in lower the sales tax in Manitoba?
Yes, when it qualifies. Manitoba Finance's Bulletin No. 012 applies the retail sales tax to the net difference payable when the trade is of the same general kind, such as a car traded on a truck, and you own the trade when the Transfer of Ownership Document is completed. If the truck is leased or registered to someone else, ask our team how the rule applies before you count on the saving.
Is it better to put more down or keep the cash?
Keep a cushion first, then put down what is left. Set aside enough for winter tires, insurance and fuel; past that, more down usually saves more than the cash would earn in savings, so compare the two rates before you decide.
The Bottom Line
How much down payment for a truck makes sense comes down to what you can put in without draining the cushion a Manitoba winter needs. Every dollar down lowers the payment and the interest; zero down keeps the cash but costs more and starts you behind. A qualifying trade may be your down payment and your tax saving at once.
Wherever you are in Manitoba, you can apply for financing online with Dunn Ram Trucks in Portage la Prairie and see what a lender asks of you, on approved credit. If a trade is part of the plan, check your truck's value with our instant cash offer before you decide how much cash to put down.
Tyler Dunn, Dunn Ram Trucks, Portage la Prairie
