Most auto loans are for between 3-5 years or 36 to 60 months. You can go longer if you want to but it isn’t for everyone. Our Ohsweken team listed the pros and cons of a long car loan.
Any auto loan over 60 months is regarded as a long term loan. They can work in some situations but aren’t universally useful. Hopefully, these pros and cons of a long car loan can tell you which applies to you.
Pros of longer auto loans include
There are a few upsides to longer auto loans in Ohsweken.
Borrow more – Borrowing over a longer term means you can borrow more for the same monthly payment you would make on a shorter loan. This may be useful for upgrading a car, buying a truck or investing in a new electric vehicle.
As cars are becoming more expensive, we are either having to put down larger down payments or borrow more. Longer loans address the latter of those two options.
Lower monthly payments – Alternatively, you could borrow the same amount as you were originally planning but have a lower monthly payment. If you have other obligations, this can mean being able to afford the loan without putting yourself into difficulty.
Lower interest rates – Longer auto loan terms or larger principal amounts can attract lower interest rates. While this will likely be a lower priority than these other benefits, it’s still a plus point in its favour.
Cons of longer auto loans include
Northing is 100% positive though and that’s the same for longer auto loans in Ohsweken.
Higher cost over the term – Interest is charged over the term of the loan. Therefore, the longer the term, the more interest is charged. Even at a lower rate, paying more months of interest will very likely increase the overall cost of borrowing.
Higher interest rates – Some longer auto loans have higher rates than standard loans. Much will depend on the amount, your credit score and the lender but we know of quite a few longer term auto loans with higher rates than a 36 month loan.
Combine the higher rate with the longer term and you’re looking at paying even more interest!
You may have the loan longer than the car – Most cars last longer than ever before but a 7 year auto loan is a long time. It might even be longer than you have the car. You can roll the loan into another for a new car but the process goes on and on.
Auto loans forever – There is a significant psychological benefit to having a set end date for some experiences. Loans are one such experience. Knowing it’s for a finite amount of time and will be over soon can be all you need to be able to successfully pay off the loan.
Having that end date so far into the future may do more harm than good. Or it could take extra willpower to see it through!
After reading the pros and cons of a long car loan, if you think a longer loan is right for you, our Ohsweken auto loan team can help!
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!