How Long Can You Finance a Used Car?

If you have been shopping for a pre-owned vehicle in the Amherst area, you may be wondering, “How long can I finance a used car?” The average auto loan term is about 60 to 72 months. However, as the price of vehicles continues to increase, it is likely that the average loan term will as well. So, how long can you finance a used car? The length of your loan depends on how much you can afford to pay on a monthly basis. In the guide below, we’ll discuss the pros and cons of shorter and longer term loans and any restrictions that you may encounter when financing a pre-owned car in the Clarence area. 

Length of Your Loan

For most Buffalo drivers, there are no restrictions on the maximum time allotted to pay off a car loan. Keep in mind that some banks set guidelines and will not allow buyers to finance vehicles that are more than seven years old with over 100,000 miles on the odometer. It is a good idea to consult with the lender of your choice to see if there are any limits like this that you should be aware of before taking the next step.

Short-Term Loans: Pros & Cons 

Advantages:

• Less Interest Over Time: Your monthly payment will be higher, but you will end up spending less in interest over the course of your loan. 
• Less Time with a Car Payment: Pay off the vehicle quicker, and enjoy one less monthly debt sooner. 
• Refinancing is Easier: If you have a strong credit score and can get a better rate by refinancing, you may want to look into this option down the road. In most cases, because your vehicle loan will spend less time upside down, it is easier to refinance with a shorter term loan. 

Disadvantages: 

• Higher Monthly Payment: As mentioned above, you will have a higher monthly payment with a shorter term loan. Before you decide on this option, make sure that the payment amount will fit comfortably into your budget. 

Long-Term Loans: Pros & Cons

Advantages: 

• Lower Monthly Payment: Because you will be paying off the loan over a longer period of time, your monthly payments will be lower. 

Disadvantages: 

• Paying More in Interest: The longer the loan term, the more interest accrues. The vehicle will end up costing you more in the long run. 
• Vehicle Depreciation: The longer the auto loan term, the more time your car will spend as “negative equity.” This is when the vehicle is worth less than the amount left on the auto loan. 

Used Car Shopping is Stress-Free at Basil Resale Sheridan

At Basil Resale Sheridan, we will help you find the perfect pre-owned vehicle and select the loan term that works best for your needs and budget. Contact us today for more information, or get pre-approved for financing right at home with our secure online application. You can also stop by in person. We’re just a short drive from Amherst.