Vehicles last longer than ever prior to. The median age of vehicles on U.S. roads was 9.two years in 2007, based on R.L. Polk & Co. Auto payments also last longer than ever. Some companies are even beginning to offer 84-month (7-year) loans. However, with that option it’s easy to find yourself “upside down,” or owing more for the vehicle than it’s worth a few years down the road. Ahead of you agree to one of these long-term auto loan, contemplate these alternatives.
Opt for a short-term loan. If you don’t anticipate keeping the automobile more than 5 or 6 years, you’re better off sticking with a short-term loan, which often has a lower interest rate. It also allows you to build equity faster allowing you to drive down the overall cost of the vehicle.
Increase your down payment. Even if you pay a small amount more up front, it will pay off in fewer interest payments over the long haul. It also can help shorten the life of your loan. Start saving money well in advance of your trip to the auto dealership. Determine what you anticipate paying each month for a vehicle loan payment. Prior to you purchase a vehicle, make a auto payment in that amount to yourself each month. Then, when you’re ready to buy a new automobile, you’ll have more to contribute to your down payment. Many consumers are now online looking for their automobile financing prior to ever heading to the dealership. Most online lenders allow you to apply from the comfort of your home and get a loan decision back in a matter of minutes. From there, if you are approved, you can download your loan documents, complete them online and then be on your way to the dealership. You are in control of the process with your financing taken care of just before heading to the dealership.
Contemplate a home equity loan. It may allow you to borrow at a lower rate than a typical auto loan because it’s secured by your home. The interest may also be tax-deductible. Consult your tax adviser regarding if you are allowed to deduct any interest.
If you are not in the market to purchase a new or used automobile or truck at the present time, contemplate an auto refinance loan. It works similar to a refinance mortgage. Apply for a loan to lower your existing payments. You keep the automobile you love but with a new lender at a lower interest rate and/or payment. There is no cost to apply and the process takes just a few minutes to complete. Good luck!