How much will I pay per month on a car if I'm a college student and my mom cosigns on the loan?

I want a $5,000 used car. I can put $2,000 down, and I want to finance the remaining $3,000. I make $1,000 a month with no expenses other than spending money. My mom will cosign for the loan because I have little credit history. How much should I expect to pay?

Answer provided by
Eric Schad
Answered on May 05, 2021
“Depending on your mom’s credit, you can reasonably assume an APR of four percent to eight percent. So let’s take six percent as a midway point.
Here’s how much you’ll pay:
  • 36 months: $91 per month with $286 in total interest ($3,286)
  • 24 months: $133 per month with $191 in total interest ($3,191)
  • 12 months: $258 per month with $98 in total interest ($3,098)
Keep in mind that the more you lower your loan term, the lower the rate will go, so this is just a ballpark example.
Also, note that you must maintain full-coverage car insurance on any vehicle you finance.
Since you’re most likely under 25, this could cost several hundred dollars a month and probably more than the car note itself. It’s just something to think about before you sign on the dotted line.”

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