Calculate your monthly payment, total interest paid, and real cost of financing. Compare loan terms side by side before you sign.
Car dealerships are very good at one thing: making a terrible financial deal feel manageable by focusing your attention on the monthly payment instead of the total cost. A $600 a month payment sounds okay until you realize you're paying it for 72 months, at 8% interest, on a car that's worth half what you paid by year three. Enter your numbers and shows you the full picture before you sign anything. Monthly payment, total interest, true cost of ownership including insurance and fuel, and a side-by-side comparison of every loan term so you can see exactly what a longer term costs you.
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With a credit score above 720, you should be targeting 5–7% on a new car loan and 7–10% on used. Anything above 12% and you should seriously pause. The total interest cost at that rate can add 25–35% to the sticker price over a 72-month term. If your credit isn't there yet, spending 6 months improving your score before buying can save you thousands.
Shorter always wins on total cost. A 36-month loan will cost you dramatically less in interest than a 72-month loan at the same rate, even though the monthly payments are higher. The catch is cash flow: that higher monthly payment has to fit your budget without strain. Our recommendation: go as short as you comfortably can, and never stretch to 84 months just to make a car "affordable." That's a sign the car is too expensive.
It means your loan balance is higher than the car's current market value. Cars depreciate fast, a new car can lose 15–20% of its value in the first year. Combine that with a small down payment and a long loan term, and you can be underwater for years. The danger: if the car is totaled or stolen, your insurance pays market value, not what you owe and you're left covering the gap out of pocket. GAP insurance exists for exactly this situation.
If the rate is 0–2% (common on promotional deals), finance it and keep your cash working in investments. If the rate is 6%+, paying cash is almost always the smarter financial move, that's a guaranteed 6% return, which is nothing to dismiss. The one exception: if paying cash would drain your emergency fund. Liquidity matters. Don't be cash-poor just to avoid interest.
Always ask for the out-the-door price in writing before you ever talk monthly payments. Dealer doc fees, paint protection, fabric guard, window tinting, and "market adjustment" surcharges are all negotiable or removable, but only if you catch them. A dealer who quotes you a monthly payment without disclosing the total price is working against you. Know your numbers before you walk in.
Way more than the sticker price. AAA estimates the average new car costs over $12,000 per year to own when you add up loan payments, insurance, fuel, maintenance, registration, and depreciation. That's $1,000 a month, before you've parked it. The "true cost" section in our calculator gives you a realistic picture. If the number surprises you, let it inform your decision on which car you actually buy.