Auto Loan Term Length? Which Length Makes the Most Sense

Depending on what your financial situation is, you might not want to choose the most common length for an auto loan term. Usually, that’s five years. It’s the standard, and it’s probably what you’ll be financed for unless you ask for something different. If you can get a three or four year loan and afford to make your monthly payments, though, you’ll be paying less overall. You’ll pay a lot less interest, and sometimes you’ll get a better rate, too.

937689 cars in a row Auto Loan Term Length? Which Length Makes the Most SenseThere are also options for longer auto loan terms. When people buy very expensive cars they sometimes finance them for six or even seven years. You can do this, of course, but you’ll pay a lot of interest over that period of time, so it’s better not to finance something for a longer period of time than is absolutely necessary.

No matter what term you decide to go with, getting your loan and having choices is a lot easier to do if you’re pre-approved. That way you’ll know how much you can borrow overall and you’ll also know whether it’s a good idea to finance for a long term, a short term, or something in between.

For most people and most cars the standard, five-year option is the best one. Any time you can save money on interest by paying something off sooner, though, it’s a good financial choice overall. It will help you improve your credit, too, because you’ll pay off your loan and your debt to income ratio will go down, raising your credit score.

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