 TITLE: How to Choose the Right Car Payment CONTENT: Look at the Auto Loan, Not the Car Payment\n------------------------------------------\nThe cheapest car payment isn't always the best option. Why? Choosing the lowest car payment often means you end up paying more for your car in the long run. To lower your car payment, you typically need to stretch out the length of your loan. Over time, that means paying more interest.\nSuppose you want to buy a $20,000 car and have a $2,000 down payment, so you're financing $18,000. A 48-month (four-year) loan at 5.09% interest will have monthly payments of $415. The interest on this loan will cost you $1,933 over four years.\nWhat if you want to reduce your car payments? Stretching the same loan out to 60 months (five years) lowers your monthly payment to $340. However, over time, you'll pay $2,425 in interest. Extend the loan to 72 months (six years) and your monthly payment drops to $291—but your total interest paid rises to $2,926.\nInstead of comparing the different car payments you can get, compare different loan offers. Do this before you ever head to the dealership. You can look up current average interest rates on auto loans online. A good strategy is to get preapproved for an auto loan so you know what loan terms you can get from a bank—then have that preapproval with you when you consider the dealer's offers.\nWhen comparing loans, look at the amount borrowed, the length of the loan and the annual percentage rate (APR) to assess the ultimate cost. The APR represents the interest rate on the loan as well as any fees involved; compare APRs for loans of the same amount and duration to determine the best deal. END