Doing a 60-month car loan is not the best way to finance a vehicle. While you may be able to make lower monthly payments, you are likely to pay much more in the long run. In addition, you have a higher chance of being underwater.
Lower monthly payments
If you’re trying to lower your monthly payments, a 60-month car loan calculator may be the solution you need. This loan offers a much more palatable payment than a 72-month loan, and it also gives you more time to pay off the loan.
You’ll have to spend more money upfront for a 60-month auto loan, however. If you add cash to your down payment, you’ll be able to reduce your overall loan amount. But this can lead to a higher balance if you don’t pay off the loan in full.
Also, the longer you take to pay off your loan, the more interest you’ll end up paying. For example, a five-year auto loan is worth more than a four-year car loan. So if you’re looking to save money, you should avoid taking out a long-term car loan.
The average length of a used-cars for sale is around 72 months. And the average term of a new-car loan is 69 months.
Increased chances of being underwater
There are many reasons why a 60 month auto loan may not be for you. One such reason is the fact that you are not guaranteed to pay off the loan in full. This is especially true if you are unlucky enough to have a car accident, as the insurance company may be on the hook for the remaining balance. For this reason alone, it’s best to opt for a shorter loan duration. You’ll also have less to worry about if you make your payments on time and in full. If you do happen to run into financial difficulties, there are a handful of loan forgiveness programs available to help you get back on your feet.
The most important lesson here is that you should take your time when deciding on a lender and a repayment plan. In addition to the usual suspects, your loan broker may be able to recommend a better option. When choosing a car loan, you will want to consider the interest rate, term length, and other potential fees and charges. Having all of this in mind will keep you on the straight and narrow and in a good financial place.
Higher total cost of borrowing
If you are looking for the best deal on a new car, you may want to consider going shorter in duration. This is especially true if you have a tight budget, as you will not only be able to save more money, but you’ll be able to get a car with better features and performance.
One of the easiest and most enjoyable ways to do this is to get pre-approved for a loan. Not only will you know how much you can borrow, but you’ll also be able to lock in a low interest rate, which will lower your monthly payment. Before you sign any loan paperwork, be sure to take a moment to read through your options and find out what’s out there.
As you shop around for a loan, you’ll come across many options, some of which have a higher cost than others. However, you’ll be able to whittle down your list to a short list of finalists and then you’ll be able to select the best fit.
Can you refinance an 84-month car loan?
Whether you’re looking to buy a new car or refinance an existing auto loan, there are many options to choose from. The length of your term can affect your monthly payments, so it’s important to find a loan that works best for you.
A longer loan term will generally result in higher interest. However, a shorter loan term will have a lower payment and make your monthly budget work better. Depending on your credit score, you may qualify for a loan with a shorter term.
Conclusion
Despite these benefits, it’s important to be aware that a longer loan term also comes with serious risks. If you’re unable to make payments on time, the lender can turn you into an upside-down borrower, which is called negative equity.
