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It depends on credit tier and whether the car is new or used: top-tier borrowers on new cars have recently seen roughly 5–7% APR, while deep subprime used-car loans can exceed 15–20%. Credit unions frequently beat dealer financing — get pre-approved before you shop.

In most states you pay sales tax only on the difference between the new car's price and your trade-in value. Trading in an $8,000 car against a $32,000 purchase at 6% saves $480 in tax on top of the $8,000 credit — a real advantage over selling privately in those states.

Long terms buy a lower payment at a triple cost: more total interest, years of being 'underwater' (owing more than the car's value), and often a higher rate. If the payment only works at 84 months, the honest signal is that the car is too expensive.

Owing more on your trade-in than it's worth. Dealers will happily roll the shortfall into your new loan — this calculator shows exactly what that does to the amount financed. Rolling debt from the last car into the next one compounds quickly; break the cycle when you can.

A common guideline is 20% on a new car (10% used) — enough to absorb first-year depreciation so you're never underwater. Larger down payments also shrink the interest you pay and can qualify you for better rates.