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The Cost of Cars – Borrow Smart

man in black t-shirt and blue denim jeans sitting on car seat

When you buy or lease a car, you pick the make, model and color.  How much you put down and how long you take to pay off the car have a big influence on what the car actually costs.  Let’s clarify a few terms first:



MSRP, or Manufacturer’s Suggested Retail Price, is the car’s base price. It does not include accessories and/or options and delivery or destination charges.

Sticker price

This total price is what the dealer would like you to pay. It includes the MSRP, accessories and/or options and delivery or destination charges. Keep in mind that the sticker price doesn’t include tax, title or registration fees.

Choosing to Buy a Car

When buying a car, most consumers will make a down payment and then finance the balance by making monthly payments until the remainder of the loan is paid in full. Interest will be charged on your loan so it’s wise to put down the highest payment you can afford upfront.

Thinking about purchasing a new car? Find out how to buy your next vehicle in three easy steps with our Auto Guide.

Let’s take a $15,000 car. You put 20% or $3,000 down, so the remaining cost is $12,000. That’s the amount that your monthly payments are based on. If you get a 6% interest rate, and you pay the car off in three years, you’ll pay $365 a month with total payments of $13,140. With $3,000 down, your $15,000 car could cost you $16,140.


If you increase the time to four years, the monthly payment drops to $282, but you’re paying a total of $16,536 for the car. The math is simple: the longer you take to pay off the balance, the more the car will end up costing.

Choosing to Lease a Car

If you decide to lease a car, you negotiate a price with the dealer and then agree to make regular payments to a leasing company over a specific amount of time. The leasing company can be a credit union, bank or a subsidiary of the car manufacturer. While buying a car makes you the owner, leasing is a way of obtaining a car for a set period of time without owning it. Your monthly payments may be significantly lower if you lease a car.

Do you have questions about buying a car? As a Member of Lone Star Credit Union, you can take advantage of the GreenPath Financial Wellness program, a free financial education and counseling program. GreenPath counselors are available Monday through Thursday 8 a.m. to 10 p.m. (EST), Friday 8 a.m. to 7 p.m. and Saturday from 9 a.m. to 6 p.m. To use this service, simply call 1-877-337-3399 or visit them on the web at

Our Member Service Center is also available to talk with you about purchasing or refinancing your vehicle. Just give us a call at 800.588.6928 send a message using our contact us form online anytime.

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