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Should I take out a longer-length car loan if it allows me to pay off my other debts faster?
"I know 60-month auto loans are the longest you should take out, but I found a lender for a 96-month loan.
I plan to use the money I'd save on payments to pay off other debt. Then, I'll put money toward the principal of the loan to pay it off early.
Is it a good idea to take out a long-length car loan?"
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“It all depends on if you’re going to take the full 96 months to pay off the car loan. If you can pay off your other loans and then refinance the car loan, it might be a good idea.
Remember that life happens. What if you lose your job or you have another unforeseen expense that might put you in default on your loan? This is just to play devil’s advocate.
In general, the 60-month term is ideal because you don’t fall victim to the depreciation of, or go immediately into negative equity on, the vehicle.
Do the calculations, and, if the 96-month loan makes sense, go for it. Just remember to refinance for a shorter term as soon as you possibly can.”
View full answer
- Gregory R.
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