I made the mistake of financing a car over a 5 year period.  It was only a $13,000 car to begin with.  I was young and stupid, I won't do that again.  

I plan to drive this car until it starts falling apart.  I'm in no hurry to have another car payment.  Next purchase will be with a lot of cash down on the car.  

Great tip and easy to forget when you don't look at the big picture. This happened to me when I bought a new fridge a few years ago and was "upsold". This cost me much more in the longer run. What's worse I even bought the more expensive warranty.

However this same trick can also work for you if applied backwards. I go through the details in this article here ( www.savingtoinvest.com/.../repay-your-mortgage-up-to-7-years.html ), but basically the idea is that if you pay one extra payment per year towards your loan you could greatly reduce the amount of interest you pay and thereby, reduce the number of years you pay toward the mortgage – by about seven years, if done diligently.

So make this concept work for you, rather than against you as the salespeople want.

I've been noticing that in recent car ads, low monthly payments, but then in the small print its a 72-month term.  My car is paid off, but if I do buy another car, if I can't buy it outright, then I'm limiting myself to a 36-month term.

I don't even want to get into 40-year mortgages.

This whole advertising and sales pitch ploy is quite tiring. my stupid sister leased a tvand could buy it after a 3 yr. contract for $1800. The damned thing only cost 2500 brand new and bythe time thecontract expired was worth $600. But it was the monthly payments that suckered her in. she is now in my "finance 101 class for stupid siblings".

Read Marshall Macluen..."The medium is the message", you'll never watch, see or hear another ad in the same way. You'll look through them. Of course you won't be loved byyour fellow consumerists, but your 401K will increase, your saving willincrease and your sense of being content will be raised exponentially.You'll also enjoycommercials, ads and marketing ploys with a lot of humor.

But the math is not quite that simple.  This ignores the terminal value of the car.  Presumably at the end of the period in question, the initially more expensive car will be worth more as a trade in or a sale.  While probably not equal to the $6000 difference in payments, it will mitigate it somewhat.  In addition there clearly is some value in driving a nicer car.

Paying up and financing over a longer period is not necessarily a scam, though you should go in with eyes open.

Jim, just guessing, but are you a car saleman?  That $6,763.68.difference that you dismiss so easily, is not all car, it is mostly interest payments.

Car Dealers are not your friend they are there to make money. Take every penny they can. I recently found out that Car Dealers do not give you the best financing. A Dealer is allowed to tack on interest on top of the "financing" you receive. When they say your loan has been approved at x% it includes this increase in interest. Get a loan from your bank and pay "cash" for your car. This will save you money.

I don't think there is anything wrong with financing a car for a longer term if you plan on driving it that long and the warranty runs that long. 72 months is getting out there, but 60 is no an issue. Again if you plan on driving it that long, and you are getting cheap money( 6% or less.)

If you were to take the money you saved and invested it theory you should be able to get better then 6% on it. Now I wouldn't actually put that money aside, but I would have some enjoyment out of it. The question is if the money I save everymonth for 3 years worth the 4 and 5th year car payments. Or is driving a nicer car worth 2 years of car payments. It all comes down to what you value more. If you have your investments, home, food, clothing taken care of and a car is next on your proirties then that is what money is for.

The job of a salesperson is to sell you goods, your job is to do the research and find out what those goods are actually worth before going shopping, particularly for those big ticket items like cars and homes and the "I want items" such as large flat screen t.vs.  To make sure you are making an informed decision when making large purchases over an extended period, get the sales person to write down the cost, interest rate, repayment duration and then walk away for a half hour (maybe grab a cup of coffee and go over the numbers).  Once you see just how much your actually paying for an item, it will either encourage you to renegotiate the terms, stick to your original budget or wait a little longer before making the purchase and save for a bigger downpayment.  Once the thrill of the purchase is over, you will be greatful that common sense pervailed, and then really have something to brag about.  I say this because by doing the research when I purchased my first car, I got an excellent price and the dealer was not able to sell me all the add-ons which usually have you paying more for a car than it's worth once you drive it off the lot.

About 10 years ago I bought my first car then traded it in for another car and another and another, rolling the negative equity into the new one each time. Horrible Horrible mistakes, each and every one of them. I ended up never owning a car. I finally read Dave Ramsey's Total Money Makeover and paid off all my debt.

3 years ago I bought my 1996 Saturn for $1900 cash. It's been a great car, no major repairs needed, just maintenance.

I HATE dealerships and will NEVER buy a car there again. I will always buy from a private party and always for cash. If I don't have the cash I won't buy it. I'll walk or ride my bike to work.