Understanding the implications of longer auto loan terms [Video]
Posted on Sunday, August 14, 2016 at 2:06:38 PM
Automotive lending has reached new heights in the past few years, which bodes well for the American economy. Consumers have more disposable income to spend on vehicles, and banks are more likely to approve loans. However, consumers need to ensure that they are making the right choice on a financing program in accordance with their financial capabilities and goals.
One recent 24/7 Wall Street article broke down some of the costs associated with short- and long-term financing programs for automobiles. According to the news provider, longer loan terms will tend to come with higher interest rates, costing the consumer more as a result. What's more, even in situations that involve a standard interest rate, the difference in financing fees between a 36-month and 96-month program can be nearly $4,000.
So, if consumers can handle the higher monthly payments associated with shorter terms, they ought to choose this method to keep the overall cost of the loan as low as possible. As always, working with a local bank can help to ensure that the loan program is best-suited to the specific consumer.