Advantages and Disadvantages to Long Term Auto Loans
The current trend in car loans is heading towards the long term auto loans that will lower monthly payments. People today are struggling to stay afloat financially and many simply cannot cope with the extra expense involved in buying an automobile outright. The long term auto loans are making buying a new car possible for many consumers. These longer loan periods of up to eight years are slowly beginning to replace three and four year loans, which were the loans of choice just a few short years ago.The employment situation in the United States has taken a turn for the worse. Many people who were once in high paying jobs are now being forced out and are taking lesser paying jobs as a result. Auto dealers and various lenders are offering long term auto loans as a result, so that these unfortunate working people can afford to buy cars.One of the disadvantages of long term auto loans is the fact that people will be stuck with their cars for longer periods of time. The typical American (in general) likes to drive a new car every three years or so, but if a person is stuck in a loan agreement for eight years, they most likely will stick with the same car, provided that it lasts that long. This is great news for the auto parts market however as people taking advantage of long term auto loans will be forced to maintain those cars. Another negative aspect associated with the long term auto loans is the fact that some lenders may discover that their balance against their loan is more than the market value of the seven or eight year old car they are driving.It is also possible that a long term car loan would carry a higher rate of interest than a short term loan. This means that even if you end up having to pay less money each month in monthly payments, more of those payments consist of interest. For this reason it is recommended that you shop around and compare interest rates on long term auto loans. With many websites online that are free to use, this option allows you to get no-cost quotes from loan providers. Take the time to use one of these sites so you are ensured that you have chosen a lender that offers the best rates.As you can see there are some clear advantages as well as disadvantages associated with taking out one of the long term auto loans that are available today. Consumers pinched for money can afford to drive new cars with these longer loan periods but they could very well end up with the short end of the stick after six or seven years. Cars depreciate in value very quickly and especially cars that are not maintained. So, if you plan on taking advantage of these long term auto loans, be diligent with your upkeep and maintenance schedule to ensure that your car is still worth as much as possible at the end of your loan term.