If you're looking for a used car loan that won't cost you an arm and a leg to pay each month, you may have been recommended a super long-term used car loan. There's no doubt that a 72-month (6 years)or 84-month (7 years)loan would help stretch out those payments, but essentially, this type of loan can often work against you.
Since long-term used car loans are looked down upon, why is it something you might consider? And if you would consider it, how can you get your hands on one without getting burned by high interest rates? Here are a few tips to think about ...
Think about How Much You Want to Pay Overall
It's very easy to buy an expensive car that you really can't afford because you're enticed by the monthly payments, but if you're makingeconomy carmoney, you might not want to purchase aluxury vehiclebecause the dealer says he can work you into "comfortable" monthly payments. In other words, it's better to think oflong-term financing as a way tomake already affordable payments lower, andnon-affordable payments affordable.
Run Through a Vehicle Checklist
If you're considering a super long-term used car loan, there are some items you want to make sure you can check offa "Don't Get Burned" list.
- Make sure you can pay for repairs long-term. It's pretty easy to think of making payments on a car when you have a warranty and don't have to think about repairs, but when the warranty expires, thoserepairs are going to fall on you. So if you're buyinga used car, you want to make sure you secure low enough payments to set aside money for car breakdowns and other expenses.
- Make sure the car is reliable. When buying a usedcar, you are already working against time before it will need some major repairs. It's for this reason that you want to make sure your vehicle is one that ranks high for reliability.
- Make sure the car has a high resale value. If you decide that you want to sell your car before the loan period ends, you may find that with a super long-term loan you owe more than the car is worth. To avoid this "upside down" loan, it's good to find a vehicle that has a high resale value.
It's not always a bad thing to takeout a super long-term used car loan. In fact, if you know how to manage it, you can completely avoid getting burned.
