GUIDE深度 · Deep dive
How Auto Loan Payments Work
An auto loan payment is driven by the loan amount, monthly rate and term. Down payment and trade-in reduce the loan; sales tax and fees increase it. Longer terms lower the payment but raise total interest.
Where the loan comes from
Loan = price plus sales tax plus fees minus down payment and trade-in; a trade-in often reduces taxable amount too.
Negative equity adds the difference to the new loan and raises the payment.
Term and interest
60 months is common; 72 or 84 lowers the payment but raises total interest and keeps you underwater longer.
The rate depends on credit, term, down payment, new versus used and the lender.
FAQ
Is 0 percent really free?
Interest is zero, but you may give up a rebate or pay full price.
Is there a prepayment penalty?
Most auto loans do not have one, but read the contract; a penalty can erase the benefit.