Ford

(F) - Get Report

posted its biggest annual loss in 2008, and

General Motors

(GM) - Get Report

(GM) and

Chrysler

are busy slashing jobs to deal with slumping demand. But before you step in and take advantage of the resulting low prices, make sure you get a loan term that's right for you.

If you live in Pennsylvania, you can get a 4.64% interest rate on a 36-month car loan from

Bank of America

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to finance 90% of the car's purchase price. Buying a $20,000 car with a $2,000 down payment would result in a monthly payment of $537 and total interest costs of $1,317. If instead you chose Bank of America's 72-month loan with a rate of 5.14%, you'd pay only $291 a month, but a total of $2,956 in interest -- $1,639 more.

Even if you manage to qualify for a deal with 0% financing -- such as the recent offer by GMAC on certain 2008 models -- you still have to deal with the risk of depreciation. Cars typically lose 15% to 20% of their value per year, but even driving it off the dealer's lot will drop the price by 10% to 15%. By extending the term of your car loan, you increase the risk that your car will depreciate faster than you can pay off the loan. You could end up owing more than your car is worth.

Securing financing with an affordable monthly payment is important. But if that requires stretching the loan out to five or six years, you may want to consider a cheaper car instead.

This article was written by a staff member of TheStreet.com.