Car financing is one of the popular means of getting a brand new car with feasible options of monthly installments. Due to expensive car rates, it is not possible for all citizens to get them at once in a single installment, that is why a new method of long term financing is observed and its trend is becoming more popular. According to reports about financing, the trend has increased from 14% to 57% in just a few years. Due to ease of payments and facilities it offers to the number of customers, people want to benefit from this facility, but there are few drawbacks associated with this type of financing an auto. If you want to take a long term loan for an auto, you should consider below mentioned advantages and drawbacks of this financing option.
Pros of long term loans:
The major benefit of long term loans is the installment, which customer pays on a monthly basis. They have to pay whole payment in 60 to 96 months and this feasible option is making car financing with long term loan option more and more popular. People who were not able to get a car due to short term loans and payments, they are now buying a car through this method.
A great advantage of long term loan is refinancing option that is offered by some of the lenders. As you have many years to pay a loan, you can re-discuss the terms and payment options. You either increase your monthly payment amount, by reducing the months in which this payment has to be done or you can look for more months by decreasing the amount of monthly installments. Both these terms can be discussed, when you have 4 to 5 more years left for paying a loan. This offer is very limited and only a few lenders take this risk. Rests, does not want to negotiate the terms, once they are fixed.
When you have to purchase a new car with grabbing technology, you cannot purchase it in one installment. These are very expensive and offer an extreme level of luxurious comfort while driving. If you are looking to get such a car, then long term financing is most feasible options. The prices and market value of these vehicles remain the same up to a few years and you will not be at risk by purchasing this vehicle.
Cons of long term Car financing:
One major drawback is the interest rate which you have to pay for long term loans. The interest rate is always there whether the loan is for short term or long, but problem with long term financing is that the interest rate getting higher many times during the period of 5 year financing. You have to pay more than the actual amount of car due to interest rates.
Another disadvantage of long term loan is the price of the car, which starts decreasing every year. The car price actually decreases to a price that can be afforded at that time and you will pay a much higher price in long installment for that car.
Cars On Terms helps you get your car loan even you are a bankrupt, student or retiree. They are located in Brisbane, Queensland, Australia.