You may know that you want or need to buy a used car, but figuring out how to afford the purchase isn't as easy. There are many options for drivers to consider, with things like interest rates, monthly payments and insurance premiums playing a role.
One of the biggest financial factors drivers must consider is the term of the auto loan. Not only does this determine how long you'll be paying off debts, but it also has a significant impact on the bottom line. If you're ready to get behind the wheel of a used car but need a little support in the form of auto loans, make sure you're considering whether a long-term option is right for you.
When it's the right move
Taking out a long-term loan has some advantages. The main benefit is that you'll be able to keep monthly payments down. This is ideal for people who may be sticking to a strict budget, as each month will have smaller payments than those associated with shorter loans. Subprime borrowers may be particularly drawn to long-term auto loans. They can take advantage of the smaller payments without sacrificing the quality of the vehicle, allowing them to stay safe on the roads.
When it's time to rethink
However, just because a long-term loan may lead to manageable monthly payments doesn't mean it's the best bet for you. USA Today noted that longer loans usually use higher interest rates, which increases the bottom line for most borrowers. So while monthly payments may be lower, the total sum paid at the end of the experience is higher. Anyone concerned about this figure and how it impacts them should think twice before signing off on a long loan.
Similarly, people who don't want to be tied to one car for an extended period of time will want to capitalize on shorter loan terms. That allows them to quickly pay off debt and have the freedom to move on to other used cars.
Discuss your options
Regardless of what you think is right, make sure you're taking the time to talk over your options with a professional. The team of experts at NJ State Auto, for example, can help you sort out the pros and cons of each offer, ultimately choosing the deal that makes the most financial sense.
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