Question 1

How is my car payment calculated?

Accepted Answer

Your monthly payment is based on the amount you finance — the vehicle price plus sales tax, minus your down payment and trade-in value — amortized over the loan term at your APR. A longer term lowers the monthly payment but increases the total interest you pay; a larger down payment or trade-in lowers both the payment and the interest.

Question 2

Does a longer loan term save money?

Accepted Answer

A longer term reduces the monthly payment but costs more overall, because you pay interest for more months. Stretching a car loan to 72 or 84 months can also leave you owing more than the car is worth for longer. If you can afford a higher payment, a shorter term saves a meaningful amount of interest.

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