How Long Can I Finance a Used Car?

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If you’re interested in buying a pre-owned vehicle in the Giddings area, you might be wondering about your financing options. While the average auto loan term ranges from 60 to 72 months (5 to 6 years), the financing term depends on a wide variety of factors such as how much you can afford to pay on a monthly basis. You can choose either a short-term or long-term loan–you’ll have to decide which works best for you based on your financial situation. The finance team at Oviedo Chrysler Dodge Jeep Ram FIAT has put together a guide outlining all the details on financing terms, so you can make an informed decision when the time comes.

What is the Maximum Amount of Time to Repay a Car Loan?

There isn’t actually a set limit for the amount of time to repay a car loan, but many banks have a few restrictions nonetheless. For example, some banks don’t allow buyers to finance used vehicles that are over seven years old or have over 100,000 miles on the odometer. For more information, contact your preferred lender and ask them about their specific policy on used car financing.

What Are the Pros & Cons of Short-Term Loans?

Short-Term Loan Pros:

  • Low Interest Expenses: With a short-term loan, you’ll have higher monthly payments, but you’ll also ultimately pay less in interest.
  • Faster Pay-Off: A higher monthly payment enables you to pay off your loan faster, along with lower interest rates.
  • Refinancing: Short-term loans make it easier to refinance your loan if you choose to, as long as you have a strong credit score.

Short-Term Loan Cons: 

  • Higher Monthly Payment: As we discussed above, a short-term loan means that you can pay off your car in less time, but it also means that you’ll be paying more each month. Be sure to carefully review your financial situation before committing to a short-term loan.

What Are the Pros & Cons of Long-Term Loans?

Long-Term Loan Pros: 

  • More Affordable Monthly Payment: Longer-term loans means you’ll be paying less each month, giving you more flexibility should your financial situation change over the course of the loan term.

Long-Term Loan Cons: 

  • Higher Interest: With a longer-term loan, you’ll also be paying more in interest each month.
  • Vehicle Depreciation: Since cars depreciate in value over time, a longer-term loan means your car will spend more time in “negative equity,” meaning its value is less than what you owe on it.

Finance Your Next Used Car at Oviedo Chrysler Dodge Jeep Ram FIAT! 

If you have any questions about used car financing, feel free to contact our office anytime! You can also stop by our dealership to talk to a member of our finance team in person – we’re conveniently located near Smithville and Weimer. For more advice on all things buying and financing, be sure to check out our car buying tips!

 

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