Americans have more frequently committed to long term loans. Just this month in fact, 33% of auto loans that were taken are for 72 month periods, according to JD Powers. The reason for this trend is because as the auto industry has improved in the last 5 years or so, interest rates have remained low. With the long loan terms and low interest rate, consumers are able to afford newer vehicles.
At Auto Credit Express, we certainly want you to be able to have the car, truck or SUV that has all the latest safety and technology features along with the sleek new designs with an auto loan you can afford. However we also want you to be aware of the upside and downside of long and short terms. Being well informed of all your options will help you make the best decisions about your investments.
The Pros and Cons
Here's what you need to keep in mind when deciding between a long term or short term loan.
- Long Term: Yes, you do have lower payments each month. But there are other things to consider too.
- You can run the risk of being upside down in your loan if the worth of the vehicle drops dramatically before the end of the term. What this means for you is that by the end of your loan, you may have possibly paid more for your vehicle than it is actually worth.
- It can be difficult enough predicting what your income may look like in the next few years, so it's even more difficult to see if you can always afford the payment 6 years down the road.
- Short Term: Most people don't like these because the monthly payments are higher, but think about this information also.
- By making the higher payments, you'll own your car more quickly.
- The vehicle will hold more worth at the end of your term, so it would be worth more for a trade in if you decide to use it that way.
- The interest you pay may be even lower than a long term loan.
As We See It
At the end of the day, the decision is yours. Make sure you have considered all your options before you sign on the dotted line. Also, make sure you are working with a dealer that can offer you the best opportunities available. Our team here at Auto Credit Express can help you with that. We work with the best dealers available in a nationwide network. Take a few moments today and complete our quick and easy online application and we'll find a dealer in your local area. Your new car, truck or SUV is only a click away. Apply today!