Car dealers love to advertise how you can get that new car for a low monthly payment, but savvy shoppers know the true cost of ownership is much higher than the sticker price. When you’re shopping for a vehicle, be sure you consider all of the vehicle costs—including interest on your loan, insurance, maintenance and sales tax—to drive away with the best deal. Here are some of the costs to consider and how they may affect your choice.

Annual Percentage Rate (APR)

APR, or annual percentage rate, is the cost of borrowing, expressed in a single percentage rate. The lower the APR, the less you’ll pay in interest. This rate is often affected by your credit history as well as your loan term. Over the life of your loan, a small difference in APR can add up.

You can use Navy Federal’s auto loan calculator to determine your own costs (and include some of the costs mentioned in the chart to the left as well). In the chart to the left, see an example of how different APR rates can affect a $10,000 auto loan with a loan term of 48 months.

  3% APR 7% APR
Loan amount $10,000 $10,000
Monthly payment $221.34 $239.46
Total paid over life of loan $10,624.32 $11,494.08
Total interest paid over life of loan $624.32 $1,494.08

Length of Loan

Loan term is another important aspect of real costs, and the length of a loan can vary considerably. Typical auto loan terms can range anywhere from 12 months to 60 months or more. The length of your loan will affect both your monthly payments and the time until the loan is paid off. 

Typically, the shorter your loan term, the less you’ll pay in interest. However, monthly payments are generally higher when a loan is condensed into a shorter term. Consider how loan terms affect a $10,000 loan at 5% interest:

Loan Term



Total Amount Paid 

Over Term

Total Interest
12-month loan $856.07 $10,272.84 $272.84
24-month loan $438.71 $10,529.04 $529.04
36-month loan $299.71 $10,789.56 $789.56
48-month loan $230.29 $11,053.29 $1,053.92
60-month loan $188.71 $11,322,60 $1,322.60


Purchase price is often the most obvious cost of a vehicle. But options and features can significantly increase the base price. Be sure to consider the upgrades that are important to you—like if your “lead foot” requires cruise control—and factor in these additional costs as well.


Sales tax varies by state, but it’s generally a straight percentage of the vehicle’s sale price. For instance, a 5 percent sales tax on a $10,000 car purchase would cost $500. This amount may be paid directly to the dealer or is due when you register the vehicle, depending on your state. Registration costs will also vary by state.

Other taxes, such as personal property taxes, may apply to your vehicle purchase as well. For active military members, many areas have exceptions that may exempt you from certain taxes when absent from your state of residence.

Annual Inspections and Maintenance

Vehicle inspections also need to be added to the equation when buying a used vehicle. It’s always important to have a vehicle inspected by a mechanic you trust to ensure its condition before you buy. You may also need to perform additional emissions or other testing as required by law depending on where you live.

Maintenance costs can vary by make, model and year. A new vehicle generally has fewer mechanical issues than a used one and may be covered by warranty for a certain period. However, even new vehicles will need servicing that isn’t covered by your warranty such as routine oil changes every 5,000 miles or so. For used vehicles, you may need to take more frequent repairs into consideration.


Insurance rates will vary based on many factors, and you may wish to speak with your insurance company when considering vehicles to see what your potential rate would be. They may offer different rates based on a vehicle’s make, model and year.

Take the Easy Route

Buying a new vehicle doesn’t have to be complicated. You can save time and money by getting pre-approved for a low-rate Navy Federal Credit Union auto loan. You can also take advantage of the Navy Federal Auto Buying Program to make finding the right vehicle a snap. Members who use the program don’t have to worry about the stress of trying to find a good deal—you’ll already qualify for low, established pricing at participating dealers.