Setting out to purchase your first vehicle is an exciting time in life. As you research all the models that catch your eye, take various vehicles out for test drives, and picture yourself owning each one, it can be hard to keep a level head. But a level head is just what you need if you hope to secure a car loan that is right for you and your needs.
Car loans are something that 43% of adult Americans have, so you’ll be in good company, but that first-time loan experience can be a tad bit overwhelming and confusing to say the least. Here we’ll take a look at all the basics so that you can go into buying process feeling like an expert.
How Long Does a Car Loan Last?
One of the first questions that new car buyers ask is how long the loan period will last for. While each lending institute is different, typical loans tend to run longer rather than shorter. According to information from Experian, the average term for an auto loan is 68 months. That’s not to say you can’t get shorter or longer terms, 68 months is just the average amount of time.
What is the Average Monthly Payment Price?
The payment will always fluctuate from person to person, but again, there are some pretty solid averages that buyers can work with. The typical average auto loan is just over $30,000, which means you are looking at a monthly payment of $503 for the 68 months. Again, these are some record numbers that are being reported.
How Can I Make My Monthly Payment More Affordable?
If that $503 monthly payment sounds too high for you and you’re wondering what you can do to bring it down, there are all kinds of things you can do. First of all, you can start by saving enough money that you can make a sizable down payment. A down payment means you will be borrowing less money, which lowers the monthly payment.
Another tip is to get a longer term. It’s not unusual to find loans that last 82 to 96 months. This will spread the payments out over a longer period of time, making them more affordable. Just remember in the end you’ll also be paying more interest.
Speaking of interest, this can act as another money-saver. It’s a good idea to shop around for your loan, don’t just assume the dealership will give you the best rate. Even if you can knock a tiny bit off the interest rate, it will save you money in the end.
Make a Purchase You Can Afford
When it comes down to it, the best advice that can be given is to make a purchase you can afford. In the end that may mean you can’t get the car with all the bells and whistles, but maybe that can be your second vehicle instead. Focus on keeping the monthly payment affordable so the car won’t become a burden.