How Many Years Can You Finance a Used Car?
Financing a car involves breaking its cost down into smaller, more manageable payments, making it easier to afford. If you’re planning on purchasing a used car but can’t afford the dealer’s price, it’s often beneficial to understand how long you can finance a used car so you can plan accordingly. At North Coast Auto Mall of Cleveland, it’s important to us that you get the vehicle you want. Below, we cover financing basics, including the general length of time you can finance a used car.
When Should You Finance a Used Car?
Purchasing a used car over a new one can help you save thousands of dollars since newer cars depreciate more quickly. You can also get a used vehicle still in excellent condition, even if it has a few miles on it. Most car buyers who aren’t able to pay the total cost of a used car at the time of purchase end up financing it by taking out a loan and paying that loan back over a certain length of time.
It’s best to finance a used car if you don’t have the funds in your bank account to pay for it in cash or if you have the funds, but paying for the vehicle might affect your ability to pay your bills. If you have a lower credit score, you may be able to get better deals on financing a used car than if you were to purchase a new car. Car buyers who don’t want to spend a lot of money due to their budget may also prefer to finance a used car rather than paying for it upfront.
How Many Years Can You Finance a Used Car?
The lender generally sets the length of time that a car buyer can finance a used car, and this often varies. The loan repayment period is usually between 24 to 84 months or two to seven years, depending on your financial constraints and your lender’s needs. Most auto loans last about 72 months or six years. Loans for used cars sometimes have a shorter length than for newer cars, as they can be significantly less expensive and often take less time to pay off.
Longer loan terms mean your monthly payments are smaller, but it will take longer for you to own your vehicle. A lower monthly payment gives you additional cash for other short-term expenses, like credit card payments or payments for other loans you might have. Similarly, short-term loans increase your monthly payments but take less time for you to pay off.
Auto loans have a few additional terms to consider in addition to term lengths, such as interest and APR. The interest rate of an auto loan is a percentage of the total amount of your loan that you owe your lender each month. APR, or annual percentage rate, is the annual cost you pay to borrow the money, including any fees you pay, and it’s expressed as a percentage.
How Many Years Should You Finance a Used Car?
The number of years you should finance a used car depends on your financial situation and personal preferences. Borrowers with enough additional money in the bank to pay off a loan quickly may prefer one with a shorter term length, while those with poor credit and lack the funds to make a substantial monthly payment will likely prefer one with a long length.
Due to the rising demand for vehicles, the maximum term length for an auto loan is 84 months or seven years. Taking out a longer loan ensures that your monthly payments will be smaller, allowing you to adjust your budget and ensure that you’ll be able to pay for all your expenses more easily. However, a longer term will also mean more time to pay off your loan in its entirety. This entails paying more for interest over time and also most likely paying a higher interest rate.
Financing a used car with a short-term loan is an excellent option if you want to pay less in interest. Short-term loans also tend to have lower interest rates, a way your lender encourages you to pay back its money sooner. Since vehicles depreciate over time, there’s also less risk of needing to pay more than your used car is worth. Although short-term loans have plenty of benefits, they can be harder to afford since they require a higher monthly payment. They may also require you to make a bigger down payment.
Benefits of Financing a Used Car Through A Dealership
It’s beneficial to finance a used car through a dealership because it can help increase the selection of vehicles available to you. You can also enjoy direct access to special deals and offers you might not otherwise get. You can also drive your car off the lot on the same day, often in just a few short hours, since there’s no intermediary. In addition, you can avoid the extra fees that a bank might charge you.
Used dealers often offer special financing specifically for buyers who have poor credit. If you fall into this category, you might have difficulty obtaining a loan through a new dealership or a traditional institution like a bank. By financing your car through a used dealership, you can remove the barriers that might otherwise hold you back from getting your dream car and gain access to loans that suit your budget and repayment schedule.
At North Coast Auto Mall, we’re proud to be one of Cleveland’s most trustworthy used car dealerships. If you’re looking for a high-quality used car, truck, or SUV in the Cleveland area, we invite you to visit our showroom or view our inventory online. Regardless of your financial situation, our friendly finance experts can help you access flexible financing rates and terms on our many used vehicles. If you want to discuss your financing opportunities, call us at 216-398-6892 or contact us online, and we’ll get back to you in no time.