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• Depreciation is the largest cost of ownership and it is invisible in a payment calculation. A new car commonly loses around a third of its value in the first year.
• Financing a depreciating asset means the balance owed can exceed the vehicle's worth for much of the term - known as being underwater.
• Long terms make this worse. Extending from 60 to 72 months lowers the payment but keeps the loan outstanding longer against a shrinking asset.
• Gap insurance covers the difference between the settlement figure and the insurer's valuation if the car is written off - most valuable when the loan is large relative to the value.

Note. Ask two questions before any car loan: what will this be worth in three years, and will I still owe more than that? If the answer to the second is yes, the term is probably too long or the deposit too small.

• The longer term saves $86 a month and costs $2,090 - before considering that you still owe on the vehicle for an extra year.
• Rates typically rise with the term - 72-month offers commonly carry a higher APR than 60-month offers, compounding the effect.
• Insurance and running costs do not fall with a longer loan term, so the payment saving does not reduce total monthly ownership cost proportionally.
• Shorter terms build equity faster, which means you can trade or sell without covering a shortfall.

1. Credit unions and banks frequently beat dealer financing on rate, particularly for borrowers with strong credit. Obtain an outside quote before visiting any dealer.
2. Dealers profit from arranging finance - they may receive a commission from the lender and sometimes mark up the rate. Negotiate the cash price first, then discuss finance separately.
3. Manufacturer finance offers such as low or zero percent can be genuinely valuable, but often require a higher deposit, exclude certain models, or are traded against a cash discount.
4. Pre-approval sets your ceiling and prevents the negotiation from being framed around monthly payment alone.
5. Rate is not the only term. Compare total repayable, fees, and flexibility on overpayment and early settlement.

Note. Always negotiate the vehicle price independently of the finance. Mixing the two allows a discount on one to be absorbed into the other, which makes the deal impossible to evaluate.

• A larger deposit reduces the amount financed and therefore the total interest paid over the term.
• It also reduces the time spent underwater - with a substantial deposit you may hold positive equity from the first month.
• Trade-in value works like cash, but only if it is negotiated as a separate line. Dealers can move value between the trade-in figure and the sale price.
• Zero deposit is possible but expensive, and on a depreciating asset it means being underwater for most or all of the term.
• Do not deplete your emergency fund for a deposit. The interest saving rarely justifies having no buffer for the unexpected repair or income interruption.

• The payment is roughly a third of the true cost of running a new car.
• Depreciation usually exceeds interest and is entirely absent from every loan calculator.
• A three-year-old car with one owner typically loses far less over the next three years than a new car does in its first.
• Compare total ownership cost across options rather than comparing payments alone - a cheaper payment on a faster-depreciating car can cost more overall.