That lower payment costs how much???

According to Kelly Blue Book, the average price of new vehicles increases by 2.5% every year. In September 2020, the average cost for a new vehicle was $38,723. The average used car price is around $22,000. Dealerships have a way of getting you into a vehicle at a "payment" you can afford, not necessarily a price you can afford. But, how much is that lower payment going to cost you? Let's take a look at a fairly average FICO score of 680 to see how much more you will be spending with those lower payments. (For illustration purposes only. Rates can vary based on financial institution)

New Car: $38,500

60 months (5 years): Rate 4.49%, Payment - $718, Interest over term - $4555

72 months (6 years): Rate 4.75%, Payment - $616, Interest over term - $5822

84 months (7 years): Rate 4.99%, Payment - $544, Interest over term - $7194

Used Car: $22,000

60 months: Rate 5.74%, Payment - $423, Interest - $3360

72 months: Rate 5.99%, Payment - $364, Interest - $4244

84 months: Rate 6.24%, Payment - $324, Interest - $5210

Depending on the term you select, you can end up paying 25 - 50% more in interest! The dealership and financial institutions aren't generally concerned about what works best for you. More convenient doesn't always mean better. You work hard for your money so why use it to help somebody else get ahead? What is your money doing for you?