Monday, September 18, 2017

The Mistakes That Come With a Longer Auto Loan Term

Most car buying stories start in a similar fashion. You have your eyes fixated on the new car but the high monthly payments do not match your current budget. The dealer suggests that you opt for a longer term period that reduces your monthly payments. You agree, thereby, falling into the vicious cycle of negative car equity. The common mistake while purchasing a car is ignoring the auto loan term. Additionally, it becomes all the more important to ascertain your loan term when you suffer from bad credit. Avoid making the following mistakes relating to loan term to ensure that your car buying decision is financially sound.

4 Mistakes that you can make with a Long Auto Loan Term

1) Getting into the rut of negative car equity

The longer the term on your auto loan, the more the build-up of negative equity. A shorter term period lessens your overall auto loan amount. Negative car equity is built when you owe the lender more than the current worth of your car. A longer time frame on your auto loan means additional interest amount whereas a short term period builds positive equity and helps you to obtain a higher amount during a trade-in or resale.

2) Paying high interest rates

The interest charged on an auto loan is the additional money you pay, over and above the price of the car. Ideally, it makes sense to opt for a shorter loan term with low interest rates. When you increase the length of the loan term, you are increasing the dollars you spend on the car. Make sure you consider the whole picture and take into account the overall loan amount along with the loan term when you purchase your next car.

3) Receiving a low resale value

A low resale value is reason enough to steer clear of the extra-long auto loans. The time you take to repay the auto loan amount significantly impacts the resale value of the car. The car value starts depreciating the minute you drive it off the dealership lot. In regards to the length of the loan term, a five-year old car is more favorable than a seven-year old car. Therefore, the shorter the loan term, the more resale value you will obtain when you sell the car.

4) Spending on high maintenance costs

Car fatigue is another reason to switch to a shorter loan term. Once you have hit your five-year mark on a car, a trade-in might be right around the corner. The average age of a car during a trade-in is five years. However, if you opt for a 72-month auto loan, the option of trade-in diminishes and your maintenance cost increases. Thus, a shorter term will not only get you a favorable resale value, but will also reduce your car maintenance costs during a trade-in.

The Ideal Solution

Every problem has a solution. A large down payment, opting for a bad credit auto loan and showing strong evidence of your sources of income will assist you when you face a difficult situation. Additionally, keep in mind the impact of negative car equity and high interest rates. Stay determined to repay your auto loan amount within a shorter time and make sure to improve your credit score for a smooth car purchase in the future.

RapidCarLoans.net offers low rate auto loans to bad credit car buyers. It makes affordable monthly payments and improvement in credit score a reality for people with credit issues. So, next time you need an auto loan, work with the bad credit auto financing company and get ready for quicker purchase.

6 comments:

  1. You share a very informative article on Car loan in this blog.

    ReplyDelete
  2. I would highly recommend Le_ meridian funding services to any person in need financial help and they will keep you on top of high directories for any further needs. Once again I commend yourself and your staff for extraordinary service and customer service, as this is a great asset to your company and a pleasant experience to customers such as myself. Wishing you all the best for the future.Le meridian funding service is best way to get an easy loan,here is there email..lfdsloans@lemeridianfds.com Or talk to Mr Benjamin On WhatsApp Via_+1-989-394-3740 Thank You for helping me with loan once again in my sincerely heart I'm forever grateful.

    ReplyDelete
  3. My name is Mrs Nadia Albert from Russia, And i am a happy woman today through the help of a Loan lender, Mr Russ Harry. I will refer any person that is looking for loan to this Loan firm. He gave  happiness to me and my family, i was in need of a loan of $500,000.00 to start my life all over as i am a single mother with 2 kids I met this honest and GOD fearing man loan lender that help me with a loan of $500,000.00 US Dollar, at a low Rate. He is a God fearing man, if you are in need of loan and you will pay back the loan please contact him Via E-mail-Elegantloanfirm@hotmail.com /Whatsapp number+393511617486

    ReplyDelete
  4. This is my first time visit here. From the tons of comments on your articles,I guess I am not only one having all the enjoyment right here!
    Rng Green rng 2001 Car Vacuum Cleaner Review
    Bergmann Typhoon Car Tyre Inflator Review
    Top 3 Best Steering Wheel Covers in India

    ReplyDelete
  5. Hello everyone, I am Jennifer Robert, currently living in New Jersey . I am a single mom at the moment with two kids and i was stuck in a financial situation in May 2019 and i needed to refinance and pay my bills. I tried seeking loans from various loan firms both private and corporate but never with success, and most banks declined my credit ,do not full prey to those hoodlums at there that call them self-money lender they are all lies , all they want is your money and you will not hear from them again they have done it to me twice before I met Mr. Anderson Raymond. I will advise you to contact Mr. Anderson if you are interested in getting a loan and you are sure you can pay them back on time you can contact them No credit check, no cosigner with just 2% interest rate and better repayment plans and schedule if you must contact any firm with reference to securing a loan.

    Email: andersonraymondloanfinance@gmail.com
    Phone: +1 (719) 629 0982
    Facebook Page : Anderson Raymond Loan
    Visit them Office Address @ (68 Fremont Ave Penrose CO, 81240

    When it comes to financial crisis and loan then Anderson Raymond loan financial is the place to go.

    ReplyDelete
  6. I was searching for a loan to sort out my bills & debts, then I saw comments about Blank ATM Credit Cards that can be hacked to withdraw money from any ATM machines around you . I doubted this but decided to give it a try by contacting {skylinktechnes@yahoo.com} they responded with their guidelines on how the card works. I was assured that the card can withdraw $5,000 instant per day & was credited with $50,000 so i requested for one & paid the delivery fee to obtain the card, i was shock to see the UPS agent in my resident with a parcel{card} i signed and went back inside and confirmed the card work after the agent left. This is no doubt because I have the card & have made use of the card. These hackers are USA based hackers set out to help people with financial freedom!! Contact these email if you wants to get rich with this Via email skylinktechnes@yahoo.com whatsapp/t: +1(213)785-1553

    ReplyDelete