A car loan is a great method for borrowing money to get the new or used car you desire. The experts at your local dealership work with a bank or credit union to get you low APR loans that will help to protect your financial stability. Picking the right loan lengths for the auto loans you take out is the best way to get the vehicle you want while keeping your monthly budget in good shape.
The best loan term for you will depend on your financial situation. A 72-month loan is considered a normal car loan, but this average loan term isn't a one-size-fits-all solution. Taking a 60-month loan can help you pay your car loan more quickly, while an 84-month car loan or other long-term auto loan options can help you pay a more manageable monthly payment. We'll go over more information on how your auto loan term impacts the financing available to you so you can make the right decision next time you're shopping for a new or used car.
How to Manage Your Monthly Payments
Choosing the right loan terms will affect the monthly car payments you make, so knowing what you're getting into ahead of time will help you make the correct financial decision. Getting a good interest rate and paying a higher down payment can help you reduce your monthly payments, but the loan term is the factor that you have the most control over.
If you need to make lower monthly payments to fit your car loan more easily into your overall budget, the experts at our finance center can help you. By fighting to get you a better interest rate and going over all the options you have as far as your loan terms and down payment goes, we'll be able to help you make a choice that lets you get a satisfying driving experience without sacrificing your financial future.
Loan Term Monthly Payment
The length of your loan will affect the average monthly payment you make over the life of the loan. Spreading out your car payment over a longer loan will lead to lower monthly payments. On the other hand, taking out a short-term loan comes with higher monthly payments.
However, this balance comes with a tradeoff. You will pay more interest on long-term car loans than you would if you took out a shorter car loan term. Paying off your vehicle will reduce the amount of money you have to put toward interest payments. Deciding between a short or long-term car loan comes down to figuring out what best fits into your overall budget.
What to Look for In An Auto Loan
Competitive Interest Rates
One of the most important factors when taking out loans for new cars is the interest rate you'll get with the loan. Interest accumulates as you pay off your car purchase, adding additional expenses on top of the loan amount itself. These expenses can add up over the average loan length of a seven-year loan.
Working with a trusted lender is important, but improving your credit score is the best avenue you have for improving your interest rate. Making regular monthly payments on your credit card and other high-interest debt will give you better interest rates when making your next car purchase.
Terms That Work for You
Knowing the average car loan length gives you an idea of what loan terms work for the average driver, but every driver's situation is unique. Taking out a short or long-term car loan can help make your monthly payment more manageable. One of our financing experts can go over the loan length options you have available and how they'll impact the monthly payments you can expect.
Take a moment to think about how your car payment will fit into your overall financial standing before you take out a loan for a new car. The high monthly payments of a short loan term might not be feasible for everyone, but they do help to reduce the amount of interest you pay over time. This can be an especially attractive option when dealing with the lower overall price of a used car. A longer-term loan will incur higher interest payments, but you'll also see lower monthly payment amounts, making it easier to fit your car purchase into your budget.
Dealerships often offer special programs that sweeten the deal for their customers. Be sure to ask the financing experts you're working with if any special offers are available, so you see all the financing options you have at your disposal. It's important to know what all the options you have available to you are before you enter into the commitment of a long-term loan.
For example, some dealerships might offer incentives for used cars or new car loans. Some dealerships might also offer seasonal incentives or offers that provide special benefits to active or former members of the nation's armed services. Taking advantage of these special offers can help you see a lower monthly payment and other perks.
Auto Loan FAQ
What Is the Average Car Loan Length?
Drivers typically take out a car loan of around 72 months. Paying off the vehicle over the life of the loan allows a good balance between a reasonable monthly payment and the total amount paid. However, taking a shorter or longer loan may be a better fit for your individual financial circumstances. Use the average car loan length as a benchmark, but you shouldn't feel constrained by this guideline and feel like you can't take out a shorter or longer loan.
What Can New Car Buyers Do to Get a Good Deal?
Building your credit score by making payments on utilities or a credit card can help you get a better deal on your car loan when you're a first-time buyer. Dealerships may also offer special incentives for first-time buyers, so be sure to talk to the experts at your local dealership's financing center to see all of the options that are available to you.
What Is Negative Equity?
Negative equity is when you owe more money for your vehicle than the vehicle is worth. This can be a difficult financial situation to navigate when you are looking for a new car loan for your next ride. If you only have a small amount of negative equity, a lender might agree to roll negative equity into your next car loan, giving you an easy way to recover your financial stability.
How Can I Find Auto Loans with the Best Interest Rates?
Paying attention to the car market and taking out a car loan when the average interest rate is low will help you get a better deal. Having a good or excellent credit score will also let you get better interest rates. Working out loan terms with the financing experts at your local dealership will give you access to their extensive resources, letting you get a more competitive interest rate.
Is Making a Large Down Payment Worth It?
As with so many aspects of financing a vehicle, deciding on the amount of money to put down with your initial purchase depends on several factors. If you have a surplus of cash on hand, putting a large down payment towards your auto loan can reduce the interest payments you have to make later down the line. Talk to the experts at your dealership and they'll work with you to figure out the down payment option that will work for you best.
What Tools Can I Use to Choose the Right Car Loan Terms?
We offer our customers a variety of tools that help them make the right decision when it comes to financing their vehicles. Our auto loan calculator makes it easy to see how a short or long-term loan will impact your financial outlook. This helps you plan effectively for any new or used car loans you intend to take out.
What Should I Do To Get a Car Without Much Money to Spend?
Financial constraints are a reality many people deal with, but you don't have to let this hurdle stop you from getting the vehicle you desire. Shopping for used cars is one option to consider, as these vehicles offer similar quality as new vehicles when bought from a trustworthy dealer at a much lower price. A cosigner can also help you get better financing, so asking people with good credit scores to vouch for you can expand the options you have available.
Who Should Consider Long Car Loans?
Long car loans are ideal for people who don't have much room in their monthly budget for a monthly payment. Making payments on your vehicle over a longer period of time will reduce the amount that you have to put toward each of those payments. Working with a lender who is flexible as to the length of your loan will let you get terms that suit your unique situation.
There's no better place to take out short or long-term loans for your vehicle than at our dealership. Using our credit union and bank partnerships, we'll help find lending options that make paying off your vehicle easy. Visit Landmark Dodge Chrysler Jeep RAM or give us a call at 816-836-0100 to learn more about the loan terms we can offer.
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