Are you considering financing your next vehicle? While many buyers opt for the average car loan length, you can decide what length you prefer. At MileOne Autogroup, we have a few tips to help you determine what’s right for you.
How Long are Most Car Loans?
There isn’t a set rule for an auto loan. You have the flexibility to decide how long your loan lasts, as long as a lender is willing to extend the loan. The average loan length is 72 months. However, they can range anywhere from 12 to 84 months.
What’s the Benefit of a Short Loan?
When you secure an auto loan, the total cost is divided into equal monthly payments over the course of your loan. Then, an interest rate is added, which is a direct fee that you owe your lender. The biggest perk of a short-term loan is lower overall interest costs. You’re also less likely to end up upside down in your loan.
What are the Perks of a Longer Loan?
With a longer term, your loan will be divided into smaller, more manageable payments. That also gives you a lower monthly debt-to-income ratio, which can make more vehicle options available to you.
Which is Right for Me?
We encourage you to utilize an auto payment calculator, which provides an estimate of your monthly payment so that you can see what to expect. As a general rule of thumb, you want to keep your auto expenses under 10 percent of your take-home pay. You can also follow the 20/4/10 rule, which recommends a four-year auto loan.
Secure Auto Financing at MileOne Autogroup Today
Do you still have questions? Our financial experts are happy to help. Visit MileOne Autogroup to apply for auto financing today!
Categories:
Finance
AdChoices