Car Loan Tips. Stretching Your Car Loan To 7 Years Is A Bad Idea

I recently read a newspaper article that car loans are stretching to 7 years and longer. Why is this? Because most car shoppers want to get into the car they want and have a monthly payment in their budget. The dealer knows you are a payment buyer and will do anything to sell you that car.

When you walk onto the car dealers lot the salesperson after making small talk will ask, what type of monthly payment are you looking for. In view of the fact that most car shoppers are payment oriented the salesperson needs a number to work with. He will never discuss the actual selling price of the car because that does not allow him to work the payment numbers in his favor. When he comes back with the payment you agree on, check the length of the loan. If you need a 6+ year loan to get the payment you need, you are probably getting in over your head. A lot of things can happen in six years, marriage, children, divorce, job transfers, layoffs, promotions, injuries. Try to purchase something that allows 2-4 years on the loan. DO NOT TEST DRIVE VEHICLES YOU CAN'T AFFORD AND THEN STRETCH OUT THE LOAN TERM SO YOU CAN! Stretching out the years will lower the payment but it will cost you more over the long run. You are buying a car not a house, so 3-4 years later when you are ready for another vehicle you will still owe 2-3 more years on your 4 year old vehicle. Scary thought, isn't it? Look at it this way. After the third or fourth year you may want to trade it in for another car and still owe more on it than it is worth.

Here is the reality. Cars depreciate fast, usually about half their price in three years. If you take out a 2-4 year loan and trade it in after 3-4 years you probably have a little equity in your car for a down payment on another one. If you are buried in a 6-8 year loan you still owe a lot more than it is worth and must roll the balance into a new loan and you now have no equity in your new car. According to the Power Information Network a unit of J.D. Powers and Associates, nearly 82 percent of car loans made in 2007 were 5-6.5 years. That is quite a large number of people buried in their car. If you are one of the very few people that will actually keep your car that long you still must consider the excess interest you will pay over the course of the loan.

Here are some numbers.

A loan for 25,000 dollars at 6 percent over 48 months will cost you 28,176 dollars. The same loan stretched out to 84 months will cost you 30,660 dollars. The payment went from 587 dollars to 306 dollars, but it cost you more over the long haul.

If you are upside-down in your car meaning you owe more on it than it is worth, be careful. The options are simple; try to sell it yourself and avoid the wholesale price at the dealer. To do this you must have cash available to pay off the lien. Or you can put a larger down payment on your new car to offset the imbalance. Another way is to look for large cash rebates that can offset the purchase price of your new car. If none of the above will work you should consider keeping the car longer until the negative balance disappears. If you allow the dealer to pay off your loan and put the negative equity on the selling price of your new car you will be even further upside down on your new car and the next time you buy it will be worse. Whenever a dealer advertises that he will pay off your loan no matter what you owe, he will but you will pay the difference. Don't be fooled into thinking he is doing you a big favor. To avoid being upside down on a new car purchase you should always try to put at least 20 percent down.

It is plan and simple! Do not get sucked into a long term car loan to keep your payment low. When the dealer brings you the loan papers at the payment you want, check the length of the loan. If it is higher than 48 months don’t sign it. When the dealer asks you what payment you are looking for, tell him the number, but also tell him you do not want a loan over 48 months. Focus on the selling price of the vehicle and if it is too high, consider a less expensive new car or a slightly used car that fits your budget. Another option is to increase your down payment on the vehicle to bring the payment down. Do not sign that 6+ year loan because you will regret it. You can find tons of information about car buying and car loans at

About the Author: Jeffrey Taylor is a car buying consultant and author of He has been giving advice on car buying tips for 11 years. Visit his website to avoid getting ripped off on your next new or used car purchase.


A Previously Owned Luxury Car Can Be A Dream Come True

By Terje Ellingsen

To many car interested people, the thought of buying a pre owned luxury car is out of the question. But for those of us who may not have the capital to purchase a brand new luxury car, a pre owned vehicle is the only option available. And when it comes to the wish of owning a luxury car, purchasing it secondhand may not be a bad decision. The question you should ask yourself before laying down a huge down payment on a secondhand luxury car is whether it is worth the investment.

How Do you Find a Proper Pre Owned Luxury Car

Whatever the reason be for you to purchase a pre owned luxury car, in order to obtain the best deal, you will have to know what features to look for and how to check the condition of the vehicle before you sign on the dotted line. It is amazingly easy to get impressed by the way the car dealer presents the car. In many cases the car is indeed a good deal, because a secondhand luxury car will be sought by a higher-end consumer who has sophisticated taste and knows what they want to buy.

Nevertheless, there is a lot of scope for painful surprises unless you make sure these are eliminated before you agree to the deal. In order to find out whether you are getting a great deal or not, you will need to have the car checked out by a trusted mechanic. Some vehicle dealers allow this check and some do not. However, it will be good for you to have the automobile thoroughly inspected before the sale.

Make Sure Know Your Car Well

Even before you go to the dealership or order your car online, you should have a fair idea of which features you are looking for in the pre owned luxury car of your choice. In order to be able to judge whether or not you are getting a great deal, you will need to have a considerable knowledge about the features of the vehicle and what you should expect to get in the model you choose.

Many of us car buyers accept what is offered only to find out later that there could have been a better deal negotiated. If you have the slightest doubt, then allow an auto technical person to accompany you when you choose the car. He or she will be in a better position to ask the right questions as well as evaluate the answers.

If you take the necessary precautions there is no need why you should not get a wonderful deal when you buy a pre owned luxury car.

Terry Bolton is an internet publisher of automotive stuff. Read his useful and popular articles about getting used car loans with low interest rates and how to get car repair help online

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Best Car Loan Rates - Tips To Getting A Low Auto Loan Rate Online

Online car loan shopping practically guarantees that you are getting the best rates. Your location is no longer a barrier to finding the best auto loan rate. However, you want to take advantage of the financing options available. While searching for an auto loan, research financing companies, negotiate terms, and increase your down payment to get low rates.

Study Financing Companies

A sure fire way to find the best car loan rate is to study financing companies. Only by requesting quotes and comparing the fine print can you truly know you are getting the lowest rate.

Fortunately, online auto loan brokers offer convenient ways to compare lenders. With some sites you can make side by side comparisons, while other sites will email you multiple financing offers. Auto loan brokers work hard to attract customers by negotiating lower rates with lenders, so you often will find better deals through their sites that through a dealership.

To ensure that you are getting accurate quotes, fill out the form as completely as possible. A slight difference in income or employment dates can reduce your interest rate.

Negotiate Terms

To find the best auto loan for your financial situation, you will want to balance the interest rates and length of your loan. Shorter loans offer lower rates, but with a higher monthly payment. Take a look at your monthly budget to see what type of auto loan would work best for your situation.

Increase Your Down Payment

While zero down or a slight down payment are options for car buyers, a large down payment will save you money. By putting down 20% or more, you will qualify for a lower interest rate, even if you have adverse credit. You will also save money by not paying interest on that portion of the vehicle's price.

Demand A Better Deal

By getting pre-qualified for a car loan, you can also reduce the cost of your vehicle by demanding a better deal from your dealership. As a pre-qualified buyer, salespeople see you as a cash buyer, and they want your money. You can negotiate for rebates, higher trade-in value of your vehicle, and extra features.

About the Author

Carrie Reeder is the owner of, an informational website about various types of loans.

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