How Long Should Your Car Loan Term Be?

Posted: Wednesday, May 3rd, 2017

If you’re looking to finance a new or used vehicle, you’re probably considering how long your loan term should be. A Green Light Auto Credit, our auto loan experts can help you find financing that meets your individual needs. Find out what the best loan length should be, then contact us to get more important facts about auto loans.

Comparing Loan Lengths

Let’s take a look at a financing example. If the amount to be financed is $29,800, and you receive an interest rate of 2.41 percent, your monthly payments on a 60-month loan would be $528 dollars. Over the life of the loan, the finance charges would come to $1,861. If you choose a loan with a 72-month term, the monthly payment would be similar at $531 per month. However, because interest rates for long term loans are usually higher, the overall finance charges would dramatically increase to $6,182. That’s more than three times the amount for the 60-month loan.

Don’t Get Left Upside Down

Another problem car buyers run into with loans is being left upside down. Often when you purchase a vehicle, you start by owing more than the car is worth, which is called being “upside down.” This can happen if you don’t make a large enough down payment, and if you choose a loan with a long term, it can make the problem worse. With a long loan term, it takes you longer to build equity in the vehicle. If you need to sell the car, or if it’s totaled in an accident, you can end up losing money.

Visit Green Light Auto Credit for an Auto Loan

Drivers in St. Louis looking for a new or used vehicle can turn to Green Light Auto Credit for all their financing needs. We work with a nationwide network of dealers to ensure you get the perfect car or truck, and we can help you figure out an ideal auto loan term for your needs. We can also help you find out how much it really costs to purchase a car, as the answer may surprise you. Contact us today to discuss all your options.