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A new or used car may be more affordable thanks to auto loans, which are a type of installment loan that divide a car purchase into monthly payments over a number of years. Typically, auto loan terms range from 36 to 96 months, and the shorter the term, the lower the interest rate.
Experian, a credit reporting agency, advises that given the increase in average loan terms, it is more crucial than ever to understand the true cost of a car loan. The average loan term for newly purchased cars in the fourth quarter of 2019 was just over 69 months. To determine your monthly payment, total interest charges, and the overall cost of your car, use the auto loan calculator below. Calculator for Auto Loans $599 Credit Score Car Price Interest Rate Trade-In Value Loan Terms Monthly Payment 55 Total Interest Paid $115,838. 00 Total Amount Paid $215,838. 00.
Featured Partner Offers1Consumers Credit UnionMinimum rate 5.19%Loan amount Starts at $7,500 (no max)Minimum credit score 6201Consumers Credit UnionLearn More On Consumers Credit Union’s Website Auto Loan FAQsHow much car can I afford?Start by determining how much of your monthly budget transportation costs should account for. One rule of thumb: Keep your total car expenses to 15% or less of your monthly take-home pay. So if you earn $3,000 a month after taxes, your all-in car costs—including auto loan payment, gas, maintenance and repairs and car insurance — should come out to no more than $450 per month. To save money, look into auto insurance discounts you may be eligible for.What loan term length should I choose?Avoid stretching out your loan term to keep your auto loan payment as low as possible. You’ll not only pay more in interest; you may also end up having negative equity, meaning you owe more on the car than it’s worth, for an extended period of time. Choose the shortest loan term you can manage while balancing other expenses like housing, savings and repaying other debts.What determines my auto loan APR?Your APR is based in large part on your credit score, and the higher your credit score, the more likely you’ll be to receive the most competitive rates. In the fourth quarter of 2019, borrowers with the lowest credit scores received an average APR of 14.25% on new car loans, while those with the highest credit scores received an average APR of 82%, according to Experian.What factors determine the total cost of a car?When you’re choosing a loan, the length of the loan term and the APR you receive will determine how much you pay in total. So will the down payment you make, and any money you receive for trading in your previous car. You’ll also need to pay for state taxes, title fees and potentially dealer-specific fees upon purchase, plus ongoing driving expenses.Where can I get an auto loan?Several types of lenders make auto loans, including car dealers, major national banks, community banks, credit unions and online lenders. You may get a particularly good deal from a lender you already have an account with, so check their rates first. Compare auto loan rates across multiple lenders to ensure you get the lowest APR possible.
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Brianna McGurran is the Loans Analyst for Forbes Advisor. She most recently worked as a staff writer and spokesperson for NerdWallet, where she wrote the Associated Press-syndicated financial advice column “Ask Brianna.” She served as a spokesperson and provided her knowledge to publications like The New York Times, ABC World News Tonight, and the Today Show. The Forbes Advisor editorial team is independent and objective. We receive money from the businesses that advertise on the Forbes Advisor website to help fund our reporting efforts and to keep providing this content without charge to our readers. This compensation comes from two main sources.
FAQ
Will banks do a 96 month auto loan?
A 96-month car loan is typically one of the longest terms available, but not all lenders will, and specialty lenders may have other, longer terms available. An eight-year car loan can offer you low monthly payments, but you may want to compare lenders if you’re looking for this.
Is 96 months too long for a car loan?
84 or 96 month auto loans are viable as long as you realize what’s involved We’ll use our standard list of benefits and drawbacks for that. Benefits of 84 or 96 month auto loans include the ability to borrow more, which is important if you want to purchase a newer or better vehicle.
Can you finance a car longer than 72 months?
How long you finance a car really depends on your individual needs, wants, and cash flow, even though you can finance a car for up to 96 months. Some consumers choose to take out a loan with a shorter term, which results in higher monthly payments but lower overall loan costs.
Is an 84-month car loan too long?
Typically, it’s best to steer clear of 84-month auto loans. They are more expensive, increase your risk of going into debt, and put additional strain on your monthly budget if you experience significant repair issues while making payments.