Financing before looking at cars is always advices. But what length of auto loans should you choose? Three-, five- and six-year loans are one of the most common choices accessible, and once upon a time, the latter option was popular. Studies for the automotive industry indicate the six year, or 72 month, loan is beginning to disappear though.
Drawbacks to the six year auto loans bad credit
Yahoo Answers suggests looking at how long you plan on keeping the car before deciding how long you would like a loan to take you to pay off. It is common for individuals to trade their car in after only three years, so a 72-month auto loans with bad credit in that scenario is a detriment. Having an upside down loan, which is where you owe more than your car’s value, can happen very easily. Unless you’re willing to keep your car for 5 years or more, then you probably shouldn’t get a 72 month auto loan. Cars Direct reports that paying down the principal will reduce the total interest you end up paying.
Credit Unions won’t work
Automotive News reports the 72 month loan was a finance product credit unions have tried to offer. They promoted the loans aggressively in order to compete with zero-percent financing packages being offered by auto manufacturers. The Kelley Blue Book (KBB) shows us that the 72 month auto loan is no longer receiving business. 60 month loans come in as probably the most popular followed by 48 and 36 month loans. The 72-month auto loan is far behind, a fact KBB attributes to the recession and its affect on consumer credit. Right now, more people are putting larger down payments on their cars. Dealers lose out on finance profit, when consumers are coming back with trade equity.
More information on this topic
Automotive News
autonews.com/article/20100723/BLOG14/100729946/-1
Cars Direct
carsdirect.com/auto-loans/seventy-two-month-used-car-loan-good-idea
Yahoo Answers
answers.yahoo.com/question/index?qid=20080317121437AAGnaNj
