A down payment is an upfront payment of cash to make a purchase of a good or a service. When someone makes a down payment on something (goods or services), he/she is only paying a percentage of the full cost of something when it is been bought. By making a loan agreement with the seller, the purchaser is going to pay a certain amount every month until he/she finishes the total cost of the product. This process implies the use of a loan to pay for the remainder cost of the product which is covered by a bank or other financial institution.