"Should I take out a longer loan on a $30,000 car for smaller monthly payments? "

"I was talking to the dealership about auto financing options for a $30,000 car. The salesman said he can get me approved for a 60-month loan at $560 per month or a 72-month loan at $470 per month. The interest rate is the same at 1.75%.

I could use some extra money each month to pay down some of my other debt, but I know it will cost me more in the long run. Should I go with the shorter loan or the longer one?

"

Answer provided by
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Johnny Puckett
Answered on May 11, 2021
“With these loan options, the difference in the amount that each will cost you in the end will be negligible, about $300. So you really shouldn’t worry about that.
However, the longer the loan is, the more of a risk you face of being upside-down on the car, and that could be a big problem depending on how well your vehicle retains its value. In the end, it is up to you, and either way you are getting a good deal on financing. “
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