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What Is The Maximum Car Loan Length In Smithville?

What Is The Maximum Car Loan Length In Smithville?

Rising car prices means we are borrowing more over longer periods. The average auto loan is steadily increasing and people are taking longer to pay them off. But what is the maximum car loan length in Smithville? What’s the downside of longer auto loans?

 

Our Smithville auto loan team finds out!

 

Smithville auto loan terms and Maximum Car Loan Length

 

Auto loans in Smithville are typically between 1 and 8 years. Loans are typically expressed in months as that’s how many monthly payments you’ll make.

 

So, a 1 year auto loan will be marketed as 12 months, 2 years 24 months, all the way to 8 years or 96 months.

 

The average seems to be 69 months for new cars and around 65 months for used cars. That’s 5.5 years.

 

What’s the downside of longer auto loans?

 

Longer auto loans mean you can borrow more with a lower monthly payment but they will often be expensive over the longer term. You’ll often get a lower interest rate for a longer loan but the amount over the term will be more expensive.

 

For example, a $20,000 car loan over 5 years (60 months) at 6% interest will work out around $388 per month. That will equate to around $3,200 in interest over the term.

 

Extend that loan to 7 years or 84 months and the monthly payment reduces to $293 but the interest over the term increases to $4,570.

 

Those are approximate amounts using default data, but you can see the difference. Longer loans can sometimes qualify for lower interest rates but that isn’t always the case.

 

You can borrow more, for longer but you will pay significantly more in interest over the term of the loan. That is something you needs to bear in mind.

 

Another downside of longer auto loans is that you’ll probably be changing loans regularly if you change your car often. The average period of same car ownership is between 5-7 years so you could be paying the loan for longer than you have the car.

 

You would of course switch out the loan for your new car but you may be perpetually be paying for an auto loan.

 

Is there an ideal auto loan term?

 

There isn’t an ideal auto loan term. We usually advise clients to always go for the shortest possible term with the most affordable monthly repayments and lower interest rate possible.

 

This may limit your options but it balances the need for money for a new car with the overall expense of a longer term auto loan. If you need to borrow more and don’t mind paying the interest, then a longer loan is obviously okay.

 

If you’re more interested avoiding paying interest as much as possible, a shorter loan with higher monthly repayments is the way to go.

 

As we often say in our blogs, there is no ‘best’ option, just the option that best for you.

 

We will use all our skill and experience to deliver the lowest possible Smithville auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

 

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Categories: Auto Loan

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