Longer Car Loans In Waterdown - Pros And Cons

Longer Car Loans In Waterdown - Pros And Cons

Posted on June 18, 2021

With new car prices increasing all the time and newer hybrids and electric cars being even more expensive, longer car loans are becoming increasingly common. But are they a good idea?

Our Waterdown auto loan team outlines the pros and cons of longer loans so you can make up your own mind.

Longer car loans in Waterdown

Longer auto loans are usually classified as 5 years and over. As you can now get loans for up to 84 months or 7 years, that now covers an increasing number of the loans we are seeing.

So here are some of the pros and cons of that type of loan.

Pros of longer auto loans

Borrow more but pay less – Longer loan terms mean being able to borrow more without putting your finances under strain each month. The longer the loan term is, the lower the monthly payment will be.

Buy a nicer car – Borrowing more means being able to buy a nicer, newer or more premium car than you otherwise would. If you’re in a position to treat yourself, why wouldn’t you?

Build credit for longer – As paying an auto loan helps your credit score, having that loan for longer means having more of an impact over a much longer time. Ideal if you’re rebuilding credit.

Leaves spare cash for other priorities – If you’re paying out less on an auto loan, you have more cash each month for other things. That has to be a good thing, right?

Cons of longer auto loans

More interest over the term – The cost of the convenience of longer loan terms is paying more interest. The rate may be lower but the period that you’re paying it is longer, meaning paying more over the length of the loan.

More potential for negative equity – If you’re buying a new car, you will potentially be upside down for longer. This should only impact you when you refinance or trade in but it’s still something to consider.

Vehicle warranty – You may still be paying for the car even after the warranty expires. While that should make much impact, it could mean you’re liable for repairs as well as the loan payment.

Older car by the end – The longer the loan, the older the car will be once paid. It’s trade in and resale value will be lower which could mean having to borrow more again or using a larger down payment.

As you can see, there are pros and cons to longer auto loans in Waterdown. Which has more influence over your decision depends entirely on your situation. We know of many customers quite happily living with 84 month auto loans!

If you think you could be one of them, contact one of our Waterdown auto loan team and we’ll walk you through the process.

Contact Unique Chrysler for help, advice and competitive Georgetown car finance and leasing.

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