When Deslin Pandolph went used car shopping, she had her budget in mind. “My goal was to not have to pay more than $400 a month,” she explained. She ultimately signed a loan agreement on a $20,000 2021 Nissan Rogue SUV. Unfortunately, the move is already proving financially disastrous for the retiree. Here’s why looking at just the monthly payment can mean a steep loss on a vehicle.

Understanding the full story of a car loan

For better or worse, many Americans rely on auto financing to drive their own set of wheels. While most of us might focus on the monthly payment, that’s just part of the loan.

Personal finance experts recommend keeping a payment under 15% of your total monthly income. Ideally, the vehicle budget caps at around 10%. And while you might think that if you can “afford” a car payment up front, you’re safe. But that’s not always true.

The interest rate and loan term are what often catch drivers off guard…usually after they’ve already bought a car

In Pandolph’s case, unfortunately, she unwittingly signed up for a 24.99% interest rate. So while her payment might feel within budget, she’ll ultimately double what she paid for the Nissan Rogue.

“I was ignorant. I needed a car to get to work, and I didn’t really look at the interest rate that much,” she told WSB-TV.

Another aspect drivers should understand is how long their payments will go. In 2025, I’m hearing about more and more car buyers opting for a seven-year car loan term. This is definitely not advisable, since it almost guarantees an underwater car loan.

Now, the SUV is worth less than $20k, but Pandolph owes much more than that

Going underwater on a car means that you’ve paid or currently owe more than it’s worth. If you have a lien on a car that doesn’t have the best reputation for reliability over time, this ups the risk of being left without a drivable vehicle while still being responsible for your car payment.

I worked at a repair shop for many years, and saw this time and time again. Folks with years of payments left on a used car with a serious mechanical failure or accident damage, leaving the vehicle bricked. The higher your used vehicle interest rate and longer your car loan term, the higher chance you’ll end up underwater and totally screwed with no way out.

At best, Pandolph says she’s just stuck with her payments, which will go on for a while, here. “I’ll still be paying for this car in my grave,” she lamented.

She could stick with the payments as long as possible until she reaches either private sale or trade-in zones. Then, she might offload the Rogue, using the sale revenue to pay off the car loan balance. In the meantime, hopefully, she can put a bit of money away over time. Then she can opt for a reliable cash car (think Toyota) or a lower-interest loan, if possible.