Consumer Loans Explained: Auto Loans, Student Loans, APR, and Hidden Costs

Americans now owe $1.71 trillion on auto loans and $1.65 trillion on student loans, and the average new-car payment has hit $765 a month. In this lecture, I explain how consumer loans work and how to figure out what a loan really costs before you sign. Here’s an example from the video: a $1,000 loan at “6% add-on interest” sounds like a 6% loan. It isn’t. Because the interest is figured on the full amount for the whole year, even as you pay it down, the true rate is about 10.9%. We also tackle a decision every car buyer faces: 0% financing or a $3,000 rebate? On a $30,000 car over 60 months, the rebate wins if you can borrow elsewhere at less than about 4.2%. Above that, take the 0%. What’s covered: Consumer debt by the numbers today When it makes sense to borrow, and when it doesn’t Single-payment vs. installment loans, fixed vs. variable rates Federal student loans for 2026–27 and what changed on July 1, 2026 Why the riskiest student loan is the one that doesn’t end in a degree Sources of consumer loans: banks, credit unions, finance companies, and more The debt safety ratio Why longer loans cost more Rebate vs. 0% financing Simple interest vs. the discount method, and how to compute the APR Auto loan rates by credit score Amortization schedules and add-on interest Prepayment penalties, credit life insurance, and the Rule of 78s Pay cash or borrow? Which loan interest is tax deductible, including the new car loan interest deduction Paying off debt: avalanche vs. snowball Free online loan calculators About me: I’m Tom Robinson, Ph.D., CPA, CFA, CFP®, CAIA, Faculty Director of the Financial Planning and Wealth Management program at George Mason University’s Costello College of Business. This video is for educational purposes only and is not financial, tax, or investment advice. Rates and statistics shown were current as of September 2026 and change often. Subscribe for more on financial planning and wealth management:    / @proftomfinplan   #ConsumerLoans #StudentLoans #AutoLoans #PersonalFinance #FinancialPlanning