In addition to reducing interest expenses, another advantage to reducing the loan term is the fact that it substantially reduces the period in which your car is worth less than the amount you need to pay off on the loan. In other words, you are reducing the amount of time that you are “underwater” on your auto loan.
Further, if you make your loan payments on time, you will likely be able to qualify for a lower interest rate loan (refinance) one to two years down the road.
Lastly, by paying a little more, you’ll either have less negative equity – or possibly even positive equity – in your current vehicle when it comes time to trade it in for a new vehicle.
The bottom line
When financing a car, especially one with a high interest rate loan, do it for the shortest loan term that you can afford. Doing so will save you a significant amount of money. Further, by making timely payments on your car loan, you should be able to re-establish (or establish) your car credit faster.
කතාව පහල ලින්ක් එකෙන් බා ගන්න
