Drive Smart, Not Broke
A car is freedom, but an auto loan can be a cage. Dealerships are designed to confuse you with monthly payments while hiding the true cost of the car. Get that new ride, but do it on your terms. Understand the math, secure your financing beforehand, and never pay a penny more than you have to.
How Auto Loans Work
Simple interest, depreciation, and why 84-month loans are a financial disaster.
Auto Loan Calculator
Calculate payments and total interest. See exactly how much that "low monthly payment" really costs.
Get a Better Rate
Don't let the dealer dictate your rate. Learn how to shop around and save thousands.
Key Auto Loan Terms
Upside Down / Negative Equity
When you owe more on the car than it is currently worth. This is a dangerous position if you need to sell or if the car is totaled.
Depreciation
The rate at which a car loses value. New cars can lose 20% of their value the moment you drive them off the lot.
GAP Insurance
Guaranteed Asset Protection. Covers the difference between the car's value and your loan balance if the car is totaled. Cheaper from your insurer than the dealer.
Term
The length of the loan. Common terms are 36, 48, 60, 72, and 84 months. Longer terms mean lower monthly payments but much higher total interest costs.
Doc Fee
Documentation Fee. A fee charged by the dealer for processing paperwork. Some states cap this, others do not. Always ask about it.
Money Factor
Used in leasing to determine the interest rate. Multiply the money factor by 2,400 to estimate the equivalent APR.