When you are in the market for a new car, it is advisable to consider financing before you visit the dealership. How long should your autoloans be? Three-, five- and six-year loans are one of the most common opportunities available, 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.
Issues with the 72 month autoloans
According to Yahoo Answers, consumers should consider how long they plan to keep their car when they take a look at length of loan. It is common for individuals to trade their car in after only three years, so a 72-month auto car loans 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. The 72 month auto loan only makes sense if you’re keeping the car for at least five years. Cars Direct reports that paying down the principal will reduce the total interest you end up paying.
Credit Unions won’t work
Credit unions tried to use the 72 month auto loan once, Automotive News. They promoted the loans aggressively in order to compete with zero-percent financing packages being offered by auto manufacturers. The Kelley Blue Book (KBB) suggests the 72 month loan is not popular anymore. Sixty-month auto loans are one of the most popular in America, followed by a near second-place tie between 48- and 36-month auto loans. The recession has affected loans so much the KBB suggests it is the reason 72 month loans are hardly used anymore. A larger down payment on more affordable vehicles is the current wave. Dealers lose out on finance profit, when consumers are coming back with trade equity.
Citations
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
