Open navigation Main Menu Mortgages
Financing a home purchase Refinancing an present loan Finding the right lender Additional Information
Looking for a financial advisor? Try our three minute test and connect with an advisor today.
Main Menu Banking
Compare Accounts Use Calculators Get help from bank reviews
Looking for a financial advisor? Try our three minute test and connect with an advisor today.
Main Menu Credit cards
Compare by category Compare using credit Compare by issuer Get advice
Looking for the ideal credit card? Find it with CardMatch(tm)
Main Menu Loans
Personal Loans Student Loans Auto Loans Loan calculators
Find the perfect personal loan in 2 minutes or less. You can also answer a few questions to receive offers with no impact to the credit rating.
Main Menu for Investing
Best of Brokerages and robo-advisors Learn the basics Additional sources
Looking for a financial advisor? Take our 3 minute quiz and match with an advisor today.
Main Menu Home equity
Find the most competitive rates Lender reviews. Use calculators. Knowledge base
Looking for a financial advisor? Try our three minute test and then match up with an advisor today.
Main Menu Real estate
Selling a house Buying a home Locating the right agent sources
Looking for a financial advisor? Try our three minute test and connect the advisor you want today.
Main Menu Insurance
Car Insurance Homeowners insurance Other insurance reviews of the company
Looking for a financial advisor? Try our three minute test and then match up the advisor you want today.
Main Menu Retirement
Accounts and retirement plans. Find out the basics about retirement calculators Additional Resources
Looking for a financial advisor? Take our 3 minute quiz and match to an adviser today.
Open search Close search
Submit
Are long-term car loan an ideal idea? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by offering you financial calculators and interactive tools that provide objective and original content, by enabling you to conduct research and compare data for free and help you make informed financial decisions. Bankrate has partnerships with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies who pay us. This compensation can affect the way and where products appear on this website, for example, for example, the sequence in which they appear within the listing categories, except where prohibited by law. Our loans, mortgages,, and other home lending products. But this compensation does have no impact on the information we provide, or the reviews that appear on this website. We do not include the universe of companies or financial offerings that could be accessible to you.
SHARE:
You are on this Page On This Page
Prev Next
Westend61/Getty Images
4 minutes read. Published on January 30, 2023.
Writen by Rebecca Betterton Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the details of using loans to buy a car.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to take control of their finances through providing concise, well-researched and well-sourced information that is broken down into complicated topics into bite-sized pieces.
The Bankrate promise
More information
At Bankrate we strive to help you make better financial choices. While we adhere to strict journalistic integrity ,
This article may include the mention of products made by our partners. Here’s how we earn money .
The Bankrate promise
Founded in 1976, Bankrate has a proven track history of helping people make smart financial choices.
We’ve maintained our reputation for more than four decades through simplifying the process of financial decision-making
process, and giving people confidence about the actions they should follow next. Bankrate follows a strict ,
So you can be sure that we’re putting your interests first. Our content is written with and edited
who ensure everything we publish is objective, accurate and trustworthy. Our loans editors and reporters focus on the points consumers care about most — the various types of loans available, the best rates, the most reliable lenders, how to pay off debt and more . This means you can feel confident when investing your money.
Integrity in editing
Bankrate has a strict policy , so you can trust that we put your interests first. Our award-winning editors and reporters provide honest and trustworthy content to aid you in making the best financial choices. Key Principles We value your trust. Our goal is to provide readers with truthful and impartial information. We have established editorial standards to ensure that happens. Our editors and reporters rigorously fact-check editorial content to ensure the information you’re reading is true. We have a strict separation with our advertising partners and the editorial team. Our editorial team doesn’t receive any direct payment by our advertising partners. Editorial Independence Bankrate’s team of editors writes for YOU the reader. Our goal is to give you the best advice that will help you make smart financial decisions for your personal finances. We adhere to the strictest guidelines in order to make sure that content isn’t influenced by advertisers. Our editorial staff receives no directly from advertisers, and all content is checked for accuracy to ensure its truthfulness. Therefore, whether you’re reading an article or review, you can trust that you’re getting reliable and dependable information.
How do we earn money?
There are money-related questions. Bankrate can help. Our experts have been helping you master your money for over four decades. We strive to continuously give our customers the right advice and tools required to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is truthful and reliable. Our award-winning editors, reporters and editors create honest and accurate content to help you make the best financial decisions. The content created by our editorial team is objective, factual, and not influenced from our advertising. We’re open about the ways we’re capable of bringing high-quality content, competitive rates, and helpful tools to you , by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products and services, or when you click on certain hyperlinks on our site. So, this compensation can influence the manner, place and in what order products appear in listing categories and categories, unless it is prohibited by law. This is the case for our mortgage, home equity and other products for home loans. Other factors, such as our own rules for our website and whether a product is offered in the area you reside in or is within your own personal credit score can also impact the way and place products are listed on this site. We strive to provide the most diverse selection of products, Bankrate does not include information about each financial or credit item or service.
A car purchase is much more than choosing whether to buy an SUV or a sedan, in black or red. If you’re buying the car using the help of a loan it is also necessary to figure out what repayment terms make the most sense for your financial and budget objectives. The cost of cars is still high when compared to prior to the COVID-19 pandemic. The average cost of a brand new car in December 2022 was more than $49,500 – 5 percent higher than the same month one year earlier and more than 20 percent higher than in December 2020 . The longer your loan duration — usually ranges from 24 to or two to seven years — the cheaper your monthly payment will be. However, a lower monthly payment has negatives, and could cost you more over the course of time. For most drivers, a long-term car loan is not a good option. The reasons to stay clear of a long-term car loan Longer-term car loans are attractive because the monthly installments will be smaller than those with a shorter-term car loan. While they let you buy a larger car , but still make the payments affordable, long-term car loans can put you in a more difficult spot financially if you’re not careful. More likely to become upside down on loan An extended loan term means you are more likely to be sometime in the future. Being upside on an auto loan is when you are owing more than the vehicle is worth. This is due to the fact that a larger portion of the monthly payment early in the loan will go toward paying interest, rather than the principal owed. In the event of an upside-down loan, it can cause danger for many reasons. If you had an accident in which the car is deemed to be as a total loss, then you could be left having to pay off the loan for a car you are unable to drive if insurance doesn’t cover the cost. In addition the longer you’re upside down on the car loan as well, the more time you have negative equity. Trading in a car with negative equity is a sign that you won’t get enough money to pay back the loan and you may even need to take out. Vehicle depreciation Depreciation is less of an issue for used vehicles in its first few years. However, long-term car loans on cars that are used don’t work. A used car likely already has an impressive amount of miles on it and a longer-term car loan allows the miles to accumulate even more. Consider, for instance, that you buy a three-year-old car with 36,000 miles on it, which is what the typical American is driving in this amount of time. If you take out a six-year loan and drive 12,000 miles annually, the norm in America will be 72,000 miles. This means that your vehicle will have 108,000 miles, and will be nearing 10 years old when you pay it off. If you choose to sell it earlier, you may find it’s worthless, or worse, that you have no equity at all. The longer-term loans with higher interest typically come with much higher . This is because longer loans are riskier for lenders. With a longer loan duration it is more likely that something might impact your financial situation before the loan is fully paid. Even when the interest rate for an extended loan is similar to a shorter term, you will still have to pay more interest over the life of the loan due to making payments on interest for a far longer period. Although your wallet might be relieved by the lower , the trade-off might not be worth it. This is an especially important aspect to consider as you consider that the Federal Reserve continues to to address pandemic-related inflation. When the Fed increases benchmark rates it raises interest rates offered by private lenders for personal loans and auto loans. The new average loan rates for 2022 were 5.16 percent . However, rates varied between 3.84 percent for those with the highest credit scores to 12.93 percent for borrowers with the lowest or most subprime scores. Are you stuck with the same car? Prior to signing an auto loan that’s as long as 84 months, be sure you’ve considered whether you’ll want to drive that same vehicle throughout the duration. Seven years is an extremely long period of time. Your requirements and needs might change. But, with a long-term loan, you will remain in the same vehicle. In most cases it is the case that extending the loan will cost you money. Alternatives to a lengthy auto loan There are many other ways to get a vehicle without agreeing to the risk associated with a long-term car loan. You can lease a car if you are struggling to get an approval for an acceptable loan, you may . leasing can help you pay lower monthly payment. Even those with good credit are more likely to get an approval to lease and be driving a fairly new vehicle. The downsides of leasing should be take note of. They have limitations on how far you can drive the vehicle throughout the lease and charges to cover excessive wear and wear and tear. And, perhaps most importantly is that you’ll be required to either or return the vehicle when the lease comes to an end. Find a co-signer excellent credit rating provides prospective lenders with extra reassurance that you’ll pay back your loan. This increases the likelihood to get approval even if your credit is imperfect. Set up a high-down payment If you want to cut down on your monthly expenses by making a large down payment amount down payment is a good alternative. The greater the amount you put down initially, the lower your monthly payments will be. Also, you are likely to be offered better rate from the lender. Is a long-term car loan worthwhile? A long-term auto loan is often not an option due to the risk of financial loss. While the lower monthly payments on a longer-term car loan may be appealing at first, it is better to save up some additional cash to boost the down payment or choose a car that is less costly and ensure that the monthly cost is more affordable with a shorter loan. The main point to remember before signing onto a long-term auto loan, consider the downsides. In addition to costing extra over the duration of the loan and a possible risk of in a position where you’re upside down on the loan . Furthermore, your car requirements could change within five to seven years when you’re still paying off the loan. Consider the alternatives to long-term loans for example, making a bigger down payment or leasing a vehicle, or obtaining a co-signer with a credit score could help you obtain more favorable loan conditions.
SHARE:
Authored by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ways and pitfalls of taking out loans to purchase the car they want.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to manage their finances by providing concise, well-studied information that breaks down otherwise complex topics into manageable bites.
Auto loans editor
Similar Articles: Auto Loans 6 minutes read March 02, 2023
Auto Loans 3min read Jan 30, 2023
Equity in the Home Equity Read 3 minutes December 12 2022
Auto Loans 4 min read Aug 19, 2022
About
Help
Legal Cookie settings Do not share my information with anyone else.
How we make money Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the promotion of sponsored goods and, services, or by you clicking on specific links on our website. Therefore, this compensation may impact how, where and when products appear in listing categories and categories, unless it is prohibited by law. We also offer mortgage or home equity products, as well as other products for home loans. Other factors, like our own rules for our website and whether a product is available within your area or at your self-selected credit score range could also affect the way and place products are listed on this website. Although we try to offer the most diverse selection of products, Bankrate does not include details about every credit or financial product or service. Bankrate, LLC NMLS ID# 1427381 | BR Tech Services, Inc. NMLS ID #1743443 |
|
(c) 2023 Bankrate, LLC. It is a Red Ventures company. All Rights Reserved.
If you have any sort of inquiries pertaining to where and how to utilize payday loans online same day pennsylvania, you can call us at our page.