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Are you getting ready to trade in your old vehicle for a newer car? If so, do you plan on getting an auto loan to pay for the purchase? Getting an auto loan makes buying a car a lot simpler. It allows you to pay off the vehicle over time instead of saving up to pay for it outright. As you begin preparing for this event, you should think about the length of your auto loan. How long do you want the car loan to last? If you have not thought about this yet, you should start now. Here are some tips to help you choose the right length for your loan.
Know Your Choices
The first thing to consider is your choices. What are the options with auto loan terms? Most lenders offer options in terms of months, which range from 12 months to 96 months. The most common term for a new car is around 72 months, while the most common term for a used car is about 48 months. You can choose any of these for your loan, but you should understand the pros and cons with shorter and longer terms before selecting the one you want.
The Pros and Cons of Shorter Loans
As you consider what term to choose, you may want to examine the pros and cons of selecting a shorter loan if you consider this option. A shorter loan term offers a way to pay off your car faster. If you choose a 24-month loan, you can pay off your car in only two years. As a result, choosing a shorter car loan gives you the advantage of repaying your loan faster. The downside to a shorter loan is higher payments. You will have to pay higher payments on the loan if you shorten the loan to just two or three years than if you had a longer duration.
The Pros and Cons of Longer Loans
Next, you can weigh the pros and cons of longer loans. A longer loan might allow you to buy a costlier vehicle because you would have more time to pay it off. A longer loan also decreases your payment amounts. The downsides to a longer-term are that it takes you longer to repay the loan, and you may pay more in interest charges.
You can talk to an auto loan lender about your options, and the lender can give you a few options. You should make sure you can afford the payment amount with the option you choose. To learn more about car loans, contact an auto loan service representative today.Share
5 June 2020