Car loans look small next to mortgages, but they are where buyers leak the most money without noticing: stretching a loan from 48 to 72 months can add thousands in interest. Enter the numbers and see the full picture before you sign.
The math of a car loan
Same amortization formula as a mortgage, just shorter. A $30,000 loan at 6.5% APR for 60 months costs about $587 per month and $5,239 in total interest. At 72 months the payment drops to roughly $505 — but interest climbs to $6,380. Lower payment, higher total price.
Dealer traps to watch
Watch for: rate markups (the dealer adds points to the bank rate), payment-focused selling ("we can get you to $399/month" by stretching the term), and add-ons rolled into the loan so you pay interest on warranties and gap insurance. Always compare the total-of-payments figure, not just the monthly number.
Preapproval is leverage
Get preapproved by your bank or credit union before visiting the dealer, then let the dealer try to beat that rate. A one-point APR improvement on a 60-month, $30,000 loan saves about $800.