What is the true cost of a car loan? Duration, amounts and reality of the figures
Source: credits.fr and cribl.fr
Buying a car on credit is common: whether for a small used vehicle or a new sedan, a car loan allows you to complete your purchase without waiting to have the necessary savings. But beyond the listed price of the car, the true cost of the transaction lies in the interest and loan terms. Let’s take a look at how much a car loan can actually cost depending on the amount borrowed and the repayment term. What Makes Up the Real Cost of a Car Loan? Before diving into the numbers, a quick reminder: the total cost of a car loan depends mainly on: The amount borrowedThe repayment term
The nominal interest rate (fixed or variable)
Additional costs (application fees, optional insurance, early repayment penalties, etc.)
The main indicator to monitor is the APR (Annual Percentage Rate), which includes all fees. The longer the term, the more interest accrues. Conversely, the faster you repay, the less it costs you… but with higher monthly payments. Concrete examples: how much does it really cost? For a small loan of
- €3,000
- Term
- Estimated interest rate (APR)
- Monthly payment Total cost
2 years 4.5% ~€131
~€3,144
3 years 5.5%
| ~€90 | ~€3,240 | 5 years | 6.5% |
|---|---|---|---|
| ~€58 | ~€3,480 | Over 5 years, the loan costs approximately €480 more than the amount borrowed. Over 2 years, only €144. For an average loan of | €15,000 |
| Term | Estimated Rate (APR) | Monthly Payment | Total Cost |
| 2 years | 4.2% | ~€652 | ~€15,648 |
3 years
5% ~€449
| ~€16,164 | 5 years | 6% | ~€290 |
|---|---|---|---|
| ~€17,400 | Result: a difference of more than €2,400 between a 2-year repayment and a 5-year repayment. For a large loan of €50,000 | Term | Estimated Rate (APR) |
| Monthly Payment | Total Cost | 2 years | 3.9% |
| ~€2,174 | ~€52,176 | 3 years | 4.5% |
~€1,486
~€53,496 5 years
| 5.5% | ~€954 | ~€57,240 | Even at a preferential rate, over 5 years, the loan costs more than €7,000 in interest. |
|---|---|---|---|
| Key takeaways | The term plays a key role: | The longer it is, the more interest accrues. | Small amounts remain reasonable, even over 5 years, but large loans can become very expensive if spread out too much. |
| Comparing rates is essential: a 1% difference can represent several hundred euros, or even thousands. | The overall cost isn’t always visible at first glance, hence the importance of requesting detailed simulations. | Our advice: if you want to borrow for your purchase, try to contact your traditional bank first; they know your situation best. | |
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