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The Pros And Cons Of Long Term Car Loans In Milton

The Pros And Cons Of Long Term Car Loans In Milton

If you’re buying a new car, you’ll already know that prices are increasing steadily. That’s going to require either a larger down payment or a larger car loan. If you’re considering the latter, you’ll be paying more per month or will need to pay for longer. That’s what we’re discussing today. Our Milton car loan team want to outline some of the pros and cons of long term car loans so you know exactly what you’re getting into.


Pros and Cons of Long Term Car Loans


Generally, any car loan over 5 years, 60 months, is regarded as long term. As we regularly see 84 or 96 month loans in Milton now, longer loans are becoming very popular.


Pros of long term car loans


As you’re tied into the loan for a significant period of time, it’s important you know what to expect.


Borrow more for a better car – A long term car loan allows you to borrow more to buy a newer or better car while keeping monthly payments sensible. As the price of cars increases and electrics gradually become more popular, people are borrowing more to buy them.


Manageable monthly payments – Some people can afford to pay more each month while others cannot. If you’re in the latter camp, spreading car loan payments out over a longer period keeps those monthly payments under control. For some, this is the only way to afford a new car.


Cons of long term car loans


It’s not all good news for long term car loans though.


More interest over the loan – Interest is applied over the term of the loan. Therefore, the longer the term, the more interest you’ll pay. The rate you’re charged may be lower but the number of payments you make will be higher, meaning paying more interest.


High chance of negative equity – Negative equity happens when the value of the car depreciates faster than the amount you’re paying off the loan. The loan ends up being for more than the car is worth, hence negative equity. It’s not an issue over the term of the loan because things even out, but not everyone is comfortable in this position.


Higher interest rates – Some long term car loans in Milton charge higher rates than standard loans. Some do not. If your interest rate is higher, you’re going to be paying out a lot in interest charges and less on the loan principal. It’s just the way loans work but is definitely something to bear in mind.


There is no right or wrong with long term car loans. They can be a viable way to buy a new car without becoming unaffordable. They do come at a cost though so it’s important to know what you’re signing up to and even more important to find a great deal.


We can help with that last part. Our Milton car loan team are experts in finding great deals.


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


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