If you are buying a car part of the whole deal is going to be taking out a loan, and that is going to involve some decisions that you have to make. The decisions that you make will determine what type of monthly payments that you make. Most people focus only on the interest rates which will be an extremely important aspect in determining how much you pay a month, but the length of the loan term will be just as important.
Most people want to have low monthly payments and one of the easiest ways that you can get this will be by taking out the longest finance term possible. Your average loan will be about 36 or 48 months which respectively are 3 and 4 years. If you do not have as much to spend or just want to spend as little as possible on your car payment then you can stretch that out to 72 or even in extreme cases 96 months.
Like with most things you have to weigh the good and the bad to see if that decision will truly be worth it in the end.
The Pros - The best part about taking out your new or used car loan for 6 to 9 years will be that your payments will be as low as possible. If you originally had planned on taking out loans for the typical 3 or 4 years then it will now be cut completely in half! That is something that everyone wants to hear when they are having to make payments every single month.
The Cons - The downsides to this though will be something that you have to consider as well. The first one is that you are going to be making payments for a long time. Of course they will be half the amount that you normally would be paying, but is it really worth the savings to be making payments for such a long time? Going hand in hand with the first one another issue is the overall amount that you pay due to interest will be more than if you take out a shorter loan. So you will be saving money on a month to month basis, but it will cost you potentially a significantly higher number overall when you calculate it out.
Most people want to have low monthly payments and one of the easiest ways that you can get this will be by taking out the longest finance term possible. Your average loan will be about 36 or 48 months which respectively are 3 and 4 years. If you do not have as much to spend or just want to spend as little as possible on your car payment then you can stretch that out to 72 or even in extreme cases 96 months.
The Pros and Cons of Long Term Financing
Like with most things you have to weigh the good and the bad to see if that decision will truly be worth it in the end.
The Pros - The best part about taking out your new or used car loan for 6 to 9 years will be that your payments will be as low as possible. If you originally had planned on taking out loans for the typical 3 or 4 years then it will now be cut completely in half! That is something that everyone wants to hear when they are having to make payments every single month.
The Cons - The downsides to this though will be something that you have to consider as well. The first one is that you are going to be making payments for a long time. Of course they will be half the amount that you normally would be paying, but is it really worth the savings to be making payments for such a long time? Going hand in hand with the first one another issue is the overall amount that you pay due to interest will be more than if you take out a shorter loan. So you will be saving money on a month to month basis, but it will cost you potentially a significantly higher number overall when you calculate it out.