*The inflation-adjusted true cost represents the present value of all your future payments. When inflation is high, the real value of the money you pay back to the lender actually decreases over time.
When taking out a car loan, most buyers focus entirely on the APR and the monthly payment. However, inflation plays a massive role in the true cost of debt. Because inflation decreases the purchasing power of money over time, the fixed monthly payment you make in year 4 or 5 is actually "cheaper" in real terms than the payment you make today.
If your auto loan interest rate is lower than the current inflation rate, paying off the loan early might not be the best financial move. In this scenario, inflation is effectively eating away at your debt faster than the interest is accumulating. Use our free calculator above to see how inflation reduces the real, present-value cost of your vehicle financing.