Friday, November 27, 2020

What should be the maximum term for an auto loan?

Although buying a car makes us all the illusion of the world, whether it is a purchase by necessity or on a whim, we have to consider certain things when talking about the financing of the vehicle, so we can avoid that later we regret the step we took.

Among the many financing options, the most popular is auto credit

Among the many financing options, the most popular is auto credit

Here the two things that stand out are the amount of down payment we have and the interest rate we receive from the financial institution; But something we should not forget is the term to which we request the loan.

In auto loans, the universal law also applies that the longer, the more interest

car loan

To all the financial ones this suits them, reason why they will sweeten the ear to him offering very interesting credits with very low monthly installments and to a very long term, so that “it does not feel the payments that it realizes”. The truth is that when you reach the end of your credit, you will realize that you ended up paying almost a quarter of the value of your car in interest, so without realizing it. Money that could have been used for something else.

Term of the loan 

Term of the loan

Experts advise that the term of the loan is not as long as possible but also that it places very high fees that it cannot cover. The idea is that it is intermediate, for example, about three or four years. One way to reduce the term without increasing the amount is by reducing the amount of credit, and for this you must deliver a considerable percentage as an initial fee.

When it comes to choosing the credit, do not be fooled and compare all the rates, including hidden costs, in order to choose one that does not end up leaving you half-pockets and the car even if it is not entirely yours.

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