Amount financed vs sticker price
You only pay interest on the amount financed โ the price minus your down payment and trade-in. A bigger down payment lowers both the monthly payment and the total interest.
Why loan term matters
Stretching to 72 or 84 months lowers the monthly payment but raises total interest and risks being โupside downโ (owing more than the car is worth). 48โ60 months is a common sweet spot.
Depreciation and the negative-equity trap
A new car can lose roughly 20% of its value in the first year and around half within five. With a long loan and a small down payment, your balance can stay higher than the carโs worth for years โ a problem if itโs totaled or you want to trade it in. A down payment of around 20%, a term of 60 months or less, and optional gap insurance are the usual ways to stay on the safe side of that line.