Although purchasing a car can be a big investment, often consumers' primary concern is the monthly payment. As cars become more technologically enhanced, and consequently more expensive, consumers are more likely to extend their payment schemes to get better cars. This is also due to the increases vehicle reliability and life span. According to "Car Loans Keep Getting Longer" an article by Dana Dratch, eighty-nine percent of car buyers are financing their vehicles for more than four years, to keep the monthly payment rate down. However, longer term car loans have few positives, the most obvious being the ability for many consumers to afford cars they previously could not. Disciplined consumers may be able to benefit form a longer loan, as they can budget to pay more than their minimum monthly payments, and take ownership of the vehicle earlier. However originally negotiating for a 5 year plus term gives the consumer the option to add what they can to the low monthly payments, and does not make a higher payment a regular requirement. Negatives lie in the fact that the vehicle loses significant value after being driven off the lot, and the delay in ownership, particularly after the 5 year mark, when value begins to decrease steeply. An important factor to look at is the resale value of a car after each year of ownership, when determining which loan length is right for you. Also the amount of interest you pay invariably increases with the added time length it takes you to repay the loan. For more information, and some examples of the differences in loan lengths, as well as the positive and negative attributes related to each one, take a look at Dratch’s article “Car Loans Keep Getting Longer” at CNNMoney. To speak to a dealership, and get the best loan rate, check out the CarLoansCanada homepage. |
