Buying a car is a big, important life decision that tremendously affects finances. There are a wide variety of car loan terms that you can choose from, usually between two years and eight years. Which is the best to choose? Follow these tips from Metro North Federal Credit Union to choose which term length is best for you.
Things to Consider When Getting a Car Loan
Everyone wants a new car, but it is important to consider your expenses before starting out on your new journey. When you are looking to buy a new car, there are a few things to consider, including but not limited to:
- Budget – For the car and monthly payments
- Down Payments – The larger the down payment, the smaller the monthly payments
- How Long You Want the Car – How soon will the car be replaced?
Looking For Short-Term Car Loans?
With a short-term car loan, the buyer spends less money overall. The shorter the car loan, the better. However, unless a large down payment is made, monthly payments tend to be higher. An online payment calculator or financial adviser can help find what your payment would be based on the term chosen. Benefits of a short-term car loan include:
- Lower interest rate
- Less interest accumulated
- Higher resale value
How About Something More Long-Term?
Long-term car loans can seem more tempting because of the lower payments. With long-term car loans, buyers can afford more expensive cars. However, more interest accumulates, which means you may pay more than the car is worth. If you plan to sell your car after payments are completed on a long-term loan, your vehicle will be lower in value. For example, a five-year-old car is more valuable than a seven-year-old car under long-term rates.
Finance Your Car with MNFCU
At Metro North Federal Credit Union, we offer a variety of terms with low rates. Whether your car is new or used, our rates are lower than dealership loans. Our staff can help you decide which length term is best for you and your budget. Contact us online!