72 months against 48
6 years gives $688.21. 4 years gives $964.93 — a difference of $276.72 more (+40.2%).
The longer term buys a smaller payment with more interest and more months underwater.
| Input | 6 years | 4 years |
|---|---|---|
| Vehicle price(usd) | 38,000 | 38,000 |
| Trade-in value(usd) | 14,000 | 14,000 |
| Still owed on the trade-in(usd) | 18,000 | 18,000 |
| Cash down payment(usd) | 4,000 | 4,000 |
| Sales tax rate(%) | 6 | 6 |
| Trade-in against sales tax | Full credit — tax only the difference | Full credit — tax only the difference |
| Title, registration and dealer fees(usd) | 700 | 700 |
| Manufacturer rebate(usd) | 0 | 0 |
| Annual interest rate (APR)(%) | 7.2 | 7.2 |
| Term(years) | 6 | 4 |
| Monthly payment | $688.21 | $964.93 |
Every figure, both ways
| Step | 6 years | 4 years | Difference |
|---|---|---|---|
| Equity in the trade-in | -4,000 | -4,000 | 0 |
| Negative equity rolled into the new loan | 4,000 | 4,000 | 0 |
| Trade-in credited against tax | 14,000 | 14,000 | 0 |
| Amount subject to sales tax | 24,000 | 24,000 | 0 |
| Sales tax | 1,440 | 1,440 | 0 |
| Sales tax the trade-in saved | 840 | 840 | 0 |
| Out-the-door price | 40,140 | 40,140 | 0 |
| Amount financed | 40,140 | 40,140 | 0 |
| Monthly payment | 688.21 | 964.93 | +276.72 |
| Total interest | 9,411.02 | 6,176.7 | -3,234.32 |
| Total you pay, cash and loan | 53,551.02 | 50,316.7 | -3,234.32 |
| Loan against vehicle price at signing(%) | 105.63 | 105.63 | 0 |
| Paying cash instead, all in | 44,140 | 44,140 | 0 |
| What financing adds over paying cash | 9,411.02 | 6,176.7 | -3,234.32 |
Questions people actually ask
- Does lowering term change the answer in proportion?
- No, and that is the point of putting them side by side. Term changes by 33% while monthly payment changes by 40%. The step table below shows which line breaks the proportion.
- What is held constant between the two columns?
- Everything except term: vehicle price, trade-in value, still owed on the trade-in, cash down payment, sales tax rate, trade-in against sales tax, title, registration and dealer fees, manufacturer rebate, annual interest rate (apr). That is what makes the difference attributable — change two things at once and neither column tells you which one moved the answer.
- Can I compare my own two numbers?
- Yes, from the address bar: add ?a.years=… and &b.years=… to set each side, and a parameter without a prefix sets both at once. The page is computed per request, so any pair works — these two are only the ones worth a link.
Change either side by adding query parameters — ?a.years=… and b.years=…. A parameter without a prefix sets both sides at once. Source: California Dept. of Tax and Fee Administration, Publication 34 — Motor Vehicle Dealers (trade-ins), Michigan Secretary of State — vehicle trade-in sales tax credit, US Consumer Financial Protection Bureau — auto loans