A dilemma that comes over any buyer is the idea of how long they should pay off an auto loan. A longer loan can lead to smaller payments made off a longer time, making it less stressful on a slim budget. On the flip side, a shorter loan period is harder on a monthly budget, but can free up a great deal of funds in a shorter amount of time by having the car fully paid off.
Edmunds looked at their data and saw that the average car loan term is about 5 and a half years now. Some are even in excess of 7 years! The reason many consumers are choosing a deal like this is because of how much money they can afford a month. Even though a deal like that might be tempting, it is best to try and get a shorter car loan term.
A reason for this is because of interest rates. Basically, the longer the payment, the more interest being paid. Even though the monthly payment one is making a month on a shorter term may look cheaper, it is actually more money due to the adding up of the interest rate by the time the loan is finished. You’d be very surprised to see just how much money that can be.
Another reason why such a longer term is a bad idea is because of the life of the vehicle. These days, newer cars are seemingly announced every month. There is a point in a car’s life where a driver wants to get a better deal on a newer car. Those who opt for the shorter term can find themselves able to get into a newer vehicle while the longer term people are stuck.
If you need help with financing, contact us at Bayside Chrysler Jeep Dodge. We’ll work with you to find the right possible loan to suit your situation. We love to say yes, you’re approved! Like us on Facebook and follow us on Twitter to see our monthly news and special offers.