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Some lenders and credit unions, however, offer extended loan terms of anywhere from 96 months (eight years) to 120 months (10 years). Although the lower monthly payment may seem attractive, a decade-long auto loan could leave you paying for a vehicle that’s worth very little 10 years from now.
Is it smart to do a 72-month car loan?
Is a 72-month car loan worth it? Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn’t an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go.
Can you get a 7 year car loan?
If you’re shopping for a new or used car, you may consider taking out an 84-month auto loan, which is a term of seven years. Before you go this route though, you should understand why this kind of loan can be risky — and whether alternative financing might be a better option.
How many years should I finance a car?
The average term length for a car loan is 72 months; this is about six years. Due to depreciation and interest, you will likely end up owing more on the car than it’s actually worth. However, if you can afford the loan agreement to have a five-year or 60-month loan, this can save you money in the long run.
Can you finance a car for 10 years? – Related Questions
How long does it take to pay off a $30000 car?
With a loan amount of $30,000, an interest rate of 8%, and a loan repayment period of 60-months, your monthly payment is around $700. Before you purchase your new vehicle, remember to budget for car maintenance, gas, and car insurance.
What is considered a high car payment?
According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn’t your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.
Is 5 years car loan too long?
For a long time, three- or five-year car loans were the norm. But more and more people are choosing longer-term auto loans. In the fourth quarter of 2021, the average loan term for new-car loans was nearly 70 months, according to the Q4 2021 Experian State of the Automotive Finance Market report.
Is 6 years too long to finance a car?
There’s really only one benefit of a long-term auto loan that spans six to seven years or even longer. The longer the car loan, the smaller the monthly payment. By taking out financing with an extended loan term, you can potentially buy a more expensive car and still stay within your monthly budget.
Is 60 months good for a car loan?
Auto loans over 60 months are not the best way to finance a car because, for one thing, they carry higher car loan interest rates. Yet 39% of new-car buyers in the first quarter of 2021 took out loans of 61 to 72 months, according to Experian.
What is a good interest rate for a 72 month car loan?
The average 72-month auto loan rate is almost 0.3% higher than the typical 36-month loan’s interest rate for new cars.
Loans under 60 months have lower interest rates for new cars.
| Loan term |
Average interest rate |
| 60-month used car loan |
4.17% APR |
| 72-month used car loan |
4.07% APR |
Is it better to finance with dealer or bank?
The primary benefit of going directly to your bank or credit union is that you will likely receive lower interest rates. Dealers tend to have higher interest rates, so financing through a bank or credit union can offer much more competitive rates.
What is a good interest rate for a car 2022?
The average interest rate for auto loans on new cars in 2022 is 4.07%. The average interest rate on loans for used cars is 8.62%. If you have a high credit score, you can expect your interest rate to be slightly lower than these figures.
What APR is too high for a car?
A high APR (“annual percentage rate”) car loan is one that charges higher-than-average interest rates. The legal limit for car loans is around 16% APR, but you will find lenders that get away with charging rates of 25% or more.
Can I ask my car lender to lower my rate?
Yes, just like the price of the vehicle, the interest rate is negotiable. The first rate for the loan the dealer offers you may not be the lowest rate you qualify for. With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders.
How can I lower my car APR?
Other Ways to Reduce Your Auto Loan Interest Rate
- Make a larger down payment. The more you borrow from a lender, the more it stands to lose if you default on your payments.
- Reduce the sales price. Again, the less money you borrow, the less of a risk you pose to lenders.
- Opt for a shorter repayment term.
- Get a cosigner.