A or month loan will likely leave you with a larger total interest payment than a loan term of 60 months or less. If your loan term is longer than 60 months, you could be making car payments long after your warranty has expired.
Many new cars come with basic warranties that last three or four years and powertrain warranties that span five or six years. A handful of automakers do offer slightly longer warranties. Once interest is factored in, this depreciation may mean that you temporarily have negative equity , or owe more on the loan than the car is worth. With a longer loan term, you build equity more slowly, and you could end up with negative equity for a much longer time period than if you had chosen a shorter loan term.
This could make selling or trading in your car more difficult down the road. If you have negative equity and want to trade in your vehicle , a car dealer may be able to roll the amount you still owe on your auto loan into your new car loan — but this will increase your monthly payment and the total amount of interest you pay on the loan.
And if you want to sell your car, you may not be able to sell it for enough money to pay off your auto loan. Negative equity could also create a serious problem if your car is totaled in a collision. Long-term auto loans are suitable for some buyers, though, and could be the best option to get on the road in a much-needed vehicle. Adjust the loan duration, interest rate and monthly payment to see how the suggested financing changes. More articles by Maxine Giza. He writes articles to help car shoppers find the right vehicles with the right financing, so they can enjoy the road ahead.
More articles by Rob Looker. Sign in Sign up. You can get your new car in 24 hours for as low as 20, KES per month. Acquire your personal car, commercial vehicle, auto for Uber or any other usage by either finding your car of choice with our online auto portal, at a car dealership or by yourself.
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Full Name. National ID number. Refinancing a car loan is essentially just taking out a new car loan — so the steps for applying are mostly the same. You'll need your driver's license, Social Security number and proof of income, as well as details about your car. If approved, you'll use the funds from your new loan to pay off your old car loan, then begin making monthly payments with your new interest rate and terms.
It is possible to sell your car with an outstanding loan, but you may have to go through a few extra steps. If your car is worth less than what you currently owe on the loan, you have what's known as negative equity — meaning you may need to pay the difference out of pocket or refinance the remaining amount with a different type of loan.
If your car is worth more than what you currently owe, on the other hand, you may be able to pocket the difference in cash when you sell the car. Whatever your situation, reach out to your lender about your options, as each lender sets different rules for selling a car with a loan. Choosing between a dealership and a bank for an auto loan is complicated.
In general, dealerships may offer higher rates than banks — but this may not be the case for used cars. Regardless, it's important to get quotes from a few banks or online lenders first; that way you can come to the dealership prepared. Ask for a quote from the dealership as well, comparing rates, terms and any additional fees. Many lenders require some form of down payment on a car. However, that's not necessarily a bad thing; making a down payment will lower your monthly payments — and the larger your down payment, the more you save.
Making a larger down payment could also lower the interest rate the lender offers you. Current Auto Loan Rates for November Written by Holly D. Written by. Holly D.
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