Picking the right auto loan term is as crucial as choosing the right car in terms of price, make, and model. In addition, not all buyers are willing to hold up on purchasing new wheels, so they often make snap decisions without fully thinking them through. The loan term length greatly impacts your savings on monthly payments. But What Is the Longest Car Loan You Can Get? Will it even help you save? Read to know more.
What Is the Longest Car Loan You Can Get?
The loan term length does not depend on the car type you select. However, there are several factors to consider when doing so. Including the price of the vehicle, the monthly budget, the financial condition, and more.
You can choose from the options that you have of standard loan terms from most lenders. Often ranging from 12 to 60 months (about five years). Since there is no ideal borrower and everyone will meet different qualifications, there isn’t a typical loan term length.
You should choose a reasonable loan term for your circumstances, but experts recommend paying off the car loan in full within three years. Some people may find it difficult to come up with the money so quickly, despite it offering the best terms conceivable.
The borrowers typically choose the longest loan period possible, which can be as long as ten years. Although the monthly payments on a loan with a longer term will be smaller, the interest rate will be much higher. It’s also not easy to find a 10-year loan because not every bank will give you one.
Why should you go for a long-term car loan?
Lower monthly payments
The most noticeable benefit of selecting a longer loan term is paying lower monthly payments. When you make your car payments over a longer period, you don’t have to put money aside each month to pay for the next payment. It gets much more manageable. And you can make timely payments and improve your credit score.
More time to make loan payments
If you’re having trouble keeping your finances in order, a longer loan term could relieve you by giving you more time to repay your debt. There is no need to stress about coming up with a large sum all at once. More of your monthly budget can be used for other priorities when you take out a loan for a longer period of time.
Buy more luxurious vehicles
Since the monthly payments are reduced when the loan term gets longer, you may now be able to afford more. So, you are not restricted to a stripped-down version and can instead purchase a more efficient model.
Monthly payments getting unmanageable? Try refinancing. With Way.com, you get the best refinance options available to you. Use our refinance loan calculator, compare the loan rates, prequalify, and save up to $1850 a year on your refinanced auto loan.
Why shouldn’t you go for a long term car loan?
Possibility of an upside-down loan
Falling prey to an upside-down loan or paying more for the car than it’s worth is a risk that comes with longer loans. This may happen if the car depreciates faster than expected or if you get into an accident and your insurance doesn’t pay for the entire worth of the car. If you need to sell or trade-in your car before paying off the full loan amount. And then you could find yourself in a financial crunch kind of situation.
Also Read:
Average Car Loan Length – What to expect in 2023
Does a 72-Month Car Loan Make Sense for Your Finance?
What Is an 84-Month Auto Loan and Should You Take It?
Financial emergencies
Your current financial situation may alter during the loan’s term. If you lose your job or have to pay for unexpected medical expenses, keeping up with your car payments could be tough. Before committing to a lengthier loan term, ensure you’re prepared to handle any challenges.
Bottom line
To sum up, it’s best practice to weigh out all of your options when deciding on your car loan term length. Don’t choose a repayment period of five or ten years if you can pay off the debt in three; doing so will just raise the interest you’ll have to pay. Ten years is the longest term available for a car loan. But a loan for five or ten years will be useful if you plan to buy a more efficient and luxurious car. Make sure to properly check your finances and future plans before signing up for one.
