 TITLE: Buying a Car: How Much Can You Afford? CONTENT: What Car Loan Can You Afford?\n-----------------------------\nThe terms of your car loan will influence how affordable it is for you. One factor that can change a loan's cost is the repayment term. Depending on the lender, typical loan terms range from 36 to 84 months.\nAs previously mentioned, choosing a longer repayment term may sound like a money saver because it reduces your monthly payment. But over time, you could end up paying a lot more in interest.\nFor example, let's say you qualify for a $30,000 loan at 5%. If you choose a 60-month term and make no down payment, your monthly payment will be $566, and you'll pay $3,968 in interest over five years.\nIf you opt for an 84-month period instead, it'll drop your monthly payment to $424, but you'll end up paying $5,617 in interest over the seven-year term—that's $1,649 more that you could spend on things that are more important to you.\nAnother significant factor in the cost of your loan is its annual percentage rate (APR). The APR determines how much interest you pay on top of the principal amount of the loan. If you have excellent credit, you can generally expect to pay less in interest. If your credit needs some work, however, you could end up with a double-digit APR and thousands more in interest charges.\nAs such, it's a good idea to check your credit score before you decide to buy a car. If you find that it's not where you want it to be, and you don't need to buy a car right now, consider taking some time to improve your credit before taking the next steps. END