Is A Car Loan A Good Idea?
When you need of a new car but you do not have money to pay for it applying for an auto loan is one solution to consider. Before scheduling an appointment at your local bank or lending office, consider applying for an auto loan right from your computer or smartphone. One of the main advantage is convenience. Apply for an auto loan online whether you are already at work in the office or if you are spending time relaxing in your spare time off from work. When you begin comparing and review lenders in your local area, be sure to determine the interest rate of each loan offer you receive. Not all loans are equal as some lenders require receivers of loans to pay back a substantial amount of money in interest alone in exchange of getting the cash you need up front. Choose an auto loan that includes the lowest interest rate possible before making a quick decision that can ultimately cause you to overspend any budget you have set in place.
Apply for an auto loan in minutes, as opposed to scheduling and waiting for an appointment with an official financial lender or loan officer. Using an online loan application solution is a way to complete the application from just about any location and within minutes rather than filling out stacks of paperwork before your loan application is processed. Additionally, learn the results of your loan application in less time when you submit your information directly online.
Another great thing about applying online is the fact that you can compare various loan terms side by side. There are a ton of websites that will allow you to input your information and show you side by side comparisons of the loans you are qualified for.
Understanding the differences between applying for an auto loan online or in person is essential before submitting an application of your own for a cash advance or long-term auto loan. Choosing the right application method can ultimately determine whether or not you approved for the cash you need to invest in the vehicle you require for everyday use.
Pros and Cons
- Interest: Normally, the shorter the car loan, the better the interest rate the lender will offer. Shorter loans have a lower risk of defaulting by the borrower. The lender likes and rewards short-term loan borrowers by reducing their interest rate. Basically, you will pay less overall for your vehicle versus signing for an extended car loan.
- Pay Off Your Car Loan Fast: A common car loan length is 60 months (5 Years). Picking a short-term car loan locks you into a bigger payment vs a 60-month car loan. The good part is, you will get out of debt in a shorter, reasonable amount of time. The faster you pay off your loan, the quicker you can move on with your life.
- You Never Owe More Than Your Car Is Worth: Most people do not think this through. About the consequences of owing more than a vehicle is worth at any given time. If you are living paycheck to paycheck, owing more than your car is worth is a very bad idea. And coughing up a large lump sum in cash may be nearly impossible, leaving you without a vehicle.
- 48-Month Loan: At times lenders charge the same interest rate for both the 36-month car loan and the 48-month car loan. Consider taking the lower monthly payment with the longer term loan, then pay more than the minimum. The big difference here is if you run into a financial jam, you can very easily start paying the minimum due to free up money for the emergency.
- 60-Month Loan: Even if a 5 year auto loan comes with a little higher interest rate, it is still possible to pay the loan off early. (Always check the fine print, sometimes there are penalties for paying off the loan early) Again, try to pay more than the minimum due. At the end of the loan term, the difference in interest may not be a lot. Also, you will have the freedom to lower your payment to the minimum due anytime you can’t afford a bigger payment.
Always use a car loan calculator to help you go through the math. First, find out what the interest rate options are per length of the auto loan. Then enter the length of the car loan with the interest rate. Jot down all the loan payment amounts.
Longer than 60-Month Car Loan: Going longer than 60 months on a car loan is not advisable. It is a dead giveaway sign you simply cannot afford the vehicle. Read again the part about owing more than the vehicle is worth. The higher interest rates in conjunction with the length of the loan nearly makes it impossible to stay ahead of depreciation.