Buying
a car has never been more convenient. Today, cars are better built,
technologically equipped and offer a variety of financing options.
However, the scenario of expensive monthly payments and poor credit
score become an unwanted hindrance. Opting for a long-term auto loan is
one way to overcome the limiting obstacles. Typically, it ranges from
six to eight years. However, before you choose a long-term auto loan, it
is essential to evaluate the pros and cons of your decision.
Pros of a Long-term Auto Loan
1. Reduced Monthly Payments
As
compared to a short-term loan, a long-term auto loan has smaller
monthly payments. The total amount of the auto loan is spread over a
longer time frame, thereby, significantly reducing the monthly payments.
Due to a small monthly payment, you can afford to buy an upgraded
version of the car as it is less burdensome to repay the loan.
2. Repair Damaged Credit
A
long-term auto loan is extended to individuals with bad credit. If you
make consistent payments throughout your term, you stand a chance to
repair your damaged credit score. Additionally, the likelihood of
obtaining refinancing for a long-term auto loan is higher than a
short-term auto loan.
Cons of a Long-term Auto Loan
1. High Interest Rates
While
the monthly payments are low, the interest rates on the long-term auto
loans are high. A longer term period means increased number of payments
with high interest rates. Therefore, you will not only be paying
interest rates for a long time, but it will also be higher than other
auto loan options.
2. Lower Resale Value
The
depreciating rate of a car ranges between 15% and 20%. By the time you
are done repaying a loan, the resale value of your car is likely to
drop. As a car is a depreciating asset, the amount you receive after
reselling it will be lower than its purchasing price. Therefore, a
potential risk of upside down is always associated with a long-term auto
loan.
So, when does it make Sense to choose a Long-term Auto Loan?
If
you suffer from bad credit, chances are the dealer will offer you a
loan which contains a long-term. Generally, individuals with a damaged
credit score can obtain it easily as it requires less credit checks.
Also, if you cannot afford expensive monthly payments, a long-term auto
loan will help you to afford the car you wish to purchase.
A
decision taken in a hurry is a decision low on evaluation. A bad credit
score may limit your probability of getting an auto loan. However, a
long-term auto loan can be a means to reach one step closer to
purchasing your dream car. Understand the pros and cons before you
decide on choosing a long-term auto loan.
Want a long-term auto loan? Or looking for a bad credit auto loan
that you can pay off in just a couple of months? CarDestination.com
offers multiple auto financing options and enables you to choose the
best deal. Get in touch with the bad credit auto loan expert. Ask for bad-credit 0 down auto loans and enjoy buying a car without a down payment.
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