It is never a good idea to rush into things, especially when considering a long-term auto loan. Obtaining a long-term auto loan has its own pros and cons. While the pros include reduced monthly payments and the opportunity to repair your damaged credit; the cons include high interest rates and a high probability of a lower resale value on your car.
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.
Fix Plaster Walls: The First Step to Great Home Painting Results
Plaster walls have many advantages but people often shy away from using plaster in their homes. The primary reason being the maintenance cost of plaster. Luckily for homeowners who want to revive the plaster walls and give them a new color, plaster repair services are available. Know what’s wrong with the walls to fix the problem for beautiful home painting results.
Convert Garage to Apartment: Put an End to Limited Living Space
A garage is no longer a dingy, old shack that acts a storage space. Today, savvy homeowners are converting the garage into an apartment and creating a quality living space for their loved ones. Let’s understand how you can make optimum usage of the garage space.
Spring Home Painting Ideas: Step into spring with a Fresh Coat of Paint
The end of winter is near! And, the race for giving your home a makeover will begin soon. Let’s take a look at a few inexpensive spring home painting ideas. Do not forget to hire an experienced painter well in advance. It will protect you from surge pricing and ensure a successful spring home painting project.
