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What's the optimal length for a car loan?
I want to get a car loan that balances low monthly payments with a decent interest rate. What's the best length for a car loan for my needs?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
According to most personal finance experts, the optimal length for a
car loan
is 48 months, although some are upping this length to 60 months due to the increased cost of vehicles and lower interest rates.By getting a 48-month car loan, you lower your interest rate compared to lengthier terms and you also pay less interest over the life of the loan. In addition, you can avoid car fatigue, which is when you’re ready for a new car but stuck paying for an old one.
The only downside to a 48-month loan is that your monthly payments will be more than for a longer term, so you’ll need to budget accordingly. But the longer loan term you choose, the more interest you’ll end up paying in the long run.
Speaking of your budget, don’t forget to budget for
full coverage car insurance
, as your lender will require it. By using the Jerry
app, you can compare rates from over 50 top carriers and find the best savings hassle-free.View full answer
- Gregory R.
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