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When It Comes to Car Loans, Shorter Is Often Better
When It Comes to Car Loans, Shorter Is Often Better A longer-term loan can make even the most expensive car look affordable. By stretching out the loan over many years, your monthly payment is likely lower, but you could end up paying a lot more in interest. Still, many people find such loans attractive. The average new car loan is now 67 months, according to Edmunds.com—the second-highest average term on record. Almost 25% of vehicle loans made in the second quarter of 2014 were for 73 to 84 months, according to Experian. That's well above the standard three- to four-year loan that used to be typical for new car purchases. Here are some of the problems with taking out a longer car loan: • The longer the term of the loan, the worse your interest is likely to be. Shorter-term loans generally qualify shoppers for a better rate; • There's a...