A $35,000 car with a $5,000 deposit, 3.5 per cent tax and registration, $400 in fees, financed at 8.5 per cent over five years. The monthly payment is $648.84 and the total cost of the car is $43,930.12.
The amount financed is $31,625.00, which is more than the $30,000 gap between price and deposit, because the on-road costs get rolled into the loan. Interest over the five years comes to $7,305.12.
The three numbers that are not the price
On-road costs are a percentage of the price, so they scale with the car and are usually financed alongside it, which means you pay interest on them too. Fees are small but sit in the same position.
Interest depends on the rate and the term together. A longer term reduces the monthly figure and increases the total, for the reason set out in the piece on loan terms: the balance stays outstanding for longer, and interest is charged on it the whole time.
Fuel is the running cost that compounds quietly
A 400 kilometre trip in a car using 7.5 litres per 100 kilometres, with fuel at $1.85 a litre, costs $55.50, which is 14 cents a kilometre. That figure is fixed at purchase by the vehicle you chose, and then multiplied by every kilometre you drive for as long as you own it.
Over 15,000 kilometres a year, 14 cents a kilometre is a little over $2,000 annually, which on the loan above is roughly a quarter of the total interest bill every single year. A car costing two cents a kilometre more is not a rounding difference over a decade.
Comparing two cars honestly
The comparison that matters is the total of purchase price, on-road costs, interest over the term, expected fuel over the distance you actually drive, and insurance and servicing. Any one of those on its own can reverse the ranking.
A cheaper car financed at a worse rate can cost more than a dearer one at a better rate. A cheaper car that drinks more fuel can lose the difference back within a few years if the annual distance is high.
The car loan calculator covers the purchase side including on-road costs, and the fuel cost per kilometre calculator handles the running side. If you are weighing finance against a lease, the car lease calculator puts that structure in the same terms.