Work out your monthly car payment and see exactly how much interest the loan costs over its full term.
| Year | Principal paid | Interest paid | Balance |
|---|
A car loan amortises exactly like a mortgage: each payment covers the interest accrued that month, and whatever is left reduces the balance. Because vehicles depreciate faster than the loan amortises, a long term with little money down often leaves you owing more than the car is worth - negative equity.
Fees rolled into the loan (documentation, registration, extended warranty) increase the amount financed, so you pay interest on them for the whole term. Paying those upfront instead usually saves more than people expect.