The real cost of financing a car

Two people buy the same $35,000 car on the same day.

Person A finances at 7% over five years. Person B finances at 12% over seven years because “the monthly payment is lower”.

Person A pays $693 a month. Total cost: $41,580.
Person B pays $618 a month. Total cost: $51,912.

Person B “saved” $75 a month. And paid $10,332 more for the same car.

This is not a rounding error. It’s the most common financing trap in consumer lending. Dealers know most buyers focus on the monthly payment, not the total cost, so they extend the loan and hide the difference.

Rule
Never shop for a car by monthly payment. Always shop by total cost. Dealerships and lenders optimise for the number they want you to see.

Action for this week
If you’re thinking about a car loan, run the numbers in any online calculator. Compare total cost, not monthly payment. The gap is always bigger than you think.

Next week
The psychology of why we overpay for things we don’t need.

Know someone about to buy a car? Forward this.

P.S. The same trick works on mortgages, personal loans, and “buy now pay later”. Always check the total cost. The monthly number is a distraction.