Are Short or Long Term Financing Options Better

Anyone looking to purchase a new, or new-to-them car knows that financing will be one of the first hurdles that they’ll need to cross before finalizing the deal. There are plenty of financing options available from local banks, large national banks, local credit unions and even private party financing. Almost any type of lender you choose will offer a range when it comes to the length of your loan. Typically this range starts at 24 months and extends up to 84 months. Of course, the term that’s offered to you will depend on whether the car is new or used. Longer terms aren’t always available for used car purchases since the car is already a few years old, at least. There are a few things to consider when choosing the right loan term for you and there are plenty more resources on this subject online at

If you choose a short repayment term of 24 or 36 months, you will finish paying off the car very quickly and you will pay less interest on the borrowed money, but your payments are likely to be fairly high, depending on the purchase price of the car you’re buying.  If you choose a middle-of-the-road term like 48 months, your payments should be manageable considering your monthly budget and you will be able to build equity in your car by the time it’s paid off. Experts agree that 48 to 60-month loan terms are generally in the best interest of the consumer since they keep down payment and monthly payments low, incur a reasonable amount of interest, and are paid off when a car is still relatively young.

The longer term car loans like those that extend for 72 to 80 months, are generally not considered to be a great deal for the consumer. While your down payment requirements might be negligible and your monthly payment extremely affordable, it’s a real possibility that towards the end of the loan term, in the last couple of years, you might find yourself upside down on the loan. This means that you still owe more than the vehicle is actually worth. Of course, this scenario depends on how well the car you bought retains its value and other factors that affect the worth of a vehicle. You’ll also pay tons of money in interest with these payment terms which make the banks more money and cost you more money. Consider your loan term options wisely when buying a car. It’s important to think into the future, not just about today.