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Should I Get a 72-Month Car Loan?

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A 72-month car loan is far from unheard of in today’s auto financing climate. However, the drawbacks often outweigh the benefits of a long-term loan. Whether or not you should opt for a loan this long has more to do with your credit and the vehicle you choose. Here’s how a 72-month loan might look, and why it could mean paying much more than you bargained for.

How Loan Terms Affect Loan Amounts

Should I Get a 72-Month Car Loan?Loan terms refer to how long you’re going to be making payments. Terms are most often referred to in months, with car loans typically starting at 24 months and stretching all the way to 84 or even 96 months.

The longer the term you agree to, the less you pay each month. However, due to interest charges, the longer you pay on a loan, the more you end up paying overall. Interest is what it costs to borrow money, and it’s stated as a percentage. It’s called your loan’s interest rate or, on a yearly basis, its annual percentage rate (APR).

Interest rates vary depending on many things, the largest of which is your credit score. Most auto loans now are simple interest loans, which means that interest is charged daily based on the loan balance (what you owe) – known as an interest charge.

With these two factors – loan term and interest rate – are combined, you could end up with interest charges that greatly increase the total amount you pay for your vehicle.

Remember that for a given loan amount, the longer the loan, the less you pay each month. But, paying less means each month means the loan balance is higher each month, so you end up paying more in interest charges over the life of the loan.

In fact, you can see how much of your payment reduces the principal balance on your monthly loan statement, as well as the part of your payment that covers the interest charges.

What a 72-Month Loan Looks Like

Let’s take a look at how loan terms affect what you pay overall.

Let’s say you’re financing a used car and borrowing $16,000 for 72 months. You’re doing this with poor credit at an interest rate of 16%. Here’s what your auto loan could look like based on different loan terms:

  

 Monthly Payment 

 Interest Paid 

 Overall Cost 

 Savings 

72-Month Loan

$347

$8,989

$24,989

n/a

60-Month Loan

$389

$7,345

$23,345

$1,644

48-Month Loan

$453

$5,765

$21,765

$3,224

To get an example of how different loan terms affect the overall cost of a loan, you can play with the numbers to see the difference using our Monthly Payment Calculator.

As you can see, getting the shortest loan you can afford saves you money overall. However, a shorter loan term means a higher monthly payment, and it can be difficult to manage that payment at times.

This is why it’s extremely important to get a reliable, affordable vehicle for the shortest loan term you can afford. It’s not just about how long your loan is, but about how you balance the monthly payment with the interest charges.

Risks to Long-Term Car Loans

The increased cost of a loan due to interest charges isn’t the only risk you face when you have a 72-month loan. Longer loan terms also come with some risks that could leave you paying for a car long after it makes sense.

Some of the risks you face with a loan term of 72 months or more can include:

  • Negative equity – Negative equity is when you owe more on your loan than the vehicle is worth. Having it is common for a short time. The longer you stretch your loan term, the longer you risk being upside down in your loan, which can lead to trouble if you want to sell, trade in, or refinance the car.
  • Maintenance – Seventy-two months – or six years – is a long time to be making payments on a vehicle. A lot can happen during that time, including excessive wear and tear, mechanical issues, and accidents, some of which may be too expensive. Do you really want to be stuck paying a loan for a car you can’t drive anymore?

In order to combat these risks, be sure to set a realistic budget, and stick to it. Choose an affordable, reliable vehicle that holds its value, and be prepared with a down payment.

A down payment can be one of your best lines of defense against negative equity, and a good way to decrease your overall loan cost, no matter how long it is.

Ready to Find a Car Loan?

If you’re ready to find a loan that can work for you, then you’ve come to the right place. At Auto Credit Express, we want to help you find a dealership that can work with you whether you have bad credit, no credit, or even a bankruptcy on your credit reports.

We work with one of the nation’s largest networks of special finance dealers. These dealerships have access to the lenders you need when you’re struggling with credit issues. Not all lenders work with all credit situations, so before you go through the hassle of spending time and money driving from dealer to dealer, let us help.

To get the process started today, simply fill out our free, no-obligation auto loan request form, and we’ll work to connect to a dealership in your area.

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Evicted California renters at greater risk of getting COVID-19

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After 70 years in Monterey County, 87-year-old Mary Martinez moved in the middle of a pandemic, evicted from her modest one-bedroom, second-floor apartment at 1118 Parkside St. in north Salinas.

According to her former landlord, Martinez was evicted because she allowed a “violent man” to live with her, violating the conditions of her lease. Martinez said the man is her epileptic nephew.

Advocates say that while evictions like Martinez’s are rarer during the pandemic, landlords are feeling the financial squeeze. Some have sold rental properties to make up for lack of income. That can leave renters out in the cold when their new landlord raises the rent by hundreds of dollars or requires all renters move out before they take over the building.

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New program to help Black-owned online businesses | Technology

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ATLANTA _ Many Black entrepreneurs struggle to get bank loans and professional help to launch new businesses. A new program aims to remove those stumbling blocks.

An Atlanta nonprofit and another business have committed $150 million to the 1 Million Black Businesses effort, which will make loans and provide financial and business advice to Black-owned startups and established small businesses. Atlanta-based nonprofit Operation Hope, which helps consumers improve credit scores, is kicking in $20 million, and Shopify, the online e-commerce is adding another $130 million for the loans and website-hosting services.

Other services firms providing expertise or help include Aprio, an Atlanta-based accounting firm, and First Horizon Bank.

It’s a package of products that many Black entrepreneurs couldn’t get through a bank or credit union, said John Hope Bryant, CEO of Operation Hope.

“A bank won’t lend you money unless you can prove that you don’t need it,” Bryant said. “That’s especially true with minority-owned small businesses.”

Small businesses with Black owners were half as likely to obtain business loans as whites, according to a Federal Reserve survey published earlier this year.

The initiative is the latest effort to help Black consumers and businesses enter the financial mainstream. Earlier this month, a group that includes rapper Killer Mike opened a digital bank aimed at Black and Latino consumers.

Banks and credit unions have tried for years to help Black consumers open checking and savings accounts. The efforts helped, as the number of U.S. households without bank accounts fell to 5.4% in 2019 from 6.5% in 2017, the Federal Deposit Insurance Corp. said Monday.

Consumers who own checking and savings accounts typically have access loans with better rates and a wider variety of financial services.

The federal government’s $660 billion loan initiative for businesses hit by COVID-19, the Paycheck Protection Program, also helped few Black-owned businesses, Bryant said. PPP loans were based on a company’s number of employees and its rent obligations. many Black-owned small businesses typically didn’t have enough workers to qualify and are based out of the owner’s residence.

Bryant said a bad credit history may not prevent applicants from receiving a loan.

He hopes more companies will contribute services such as insurance advice or software typically available only to well-established businesses.

Bryant noted that 1MBB is not a charitable organization, as participating companies like Shopify will likely get a pipeline of new business customers through the program.

“This is not pure philanthropy,” he said. “Shopify believes that Black-owned businesses are good businesses if they’re properly supported.”

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This Week’s Top Car Deals & Analysis – October 30, 2020

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The final days of October offer a chance to take advantage of outstanding model year-end deals. Most offers end November 2, which means there isn’t much time left to enjoy this month’s best lease deals and deepest new car discounts. We even found incentives that can help those with bad credit buy a new or used car.

2021 car deals. Interestingly, 2021 new car incentives are showing some surprises. For example, Audi is already offering up to $12,000 in savings when leasing the 2021 e-tron all-electric crossover. We even learned that the new Genesis GV80 SUV will debut with a $589/month lease deal plus special financing rates.

Believe it or not, the 2021 Hyundai Veloster N could prove to be a great value despite a nearly $4,700 price increase compared to the previous year. That’s because our analysis finds that better incentives can make it just $10/month more expensive to lease than the 2020 model. Talk about getting more for your money.

Why are small cars bad to lease? Even though smaller cars typically come with lower price tags, that isn’t always the case when leasing. A mix of lower discounts, worse residual values, and smaller discounts can actually make a Nissan Altima cheaper than a Versa despite having an almost $10,000 difference in MSRP.

Shorter-mileage leases. More brands are offering shorter mileage allowances on car leases. Although this is typically used to offer consumers more flexibility, we’ve found cases in which you can end up getting less for your money. If you don’t read all the fine print, this could make comparison-shopping difficult.

Bad credit car deals. If you have subprime credit, you may find it harder to get financed. However, some manufacturers are offering special incentives to help make cars & trucks more affordable. For example, Chevy is offering $2,000 in down payment assistance plus 9.9% APR for 72 months on the 2020 Trax.

$0 down leases. If you’re adamant about now putting down any money on a lease, you’ll love Sign & Drive leases. In addition to requiring no money down, $0 down lease deals can cover your first month’s payment. Even hot sellers like the Honda CR-V Hybrid offer $0 down and as little as $330/month on a lease.

The high cost of safety? Even though most major automakers are offering more safety features than ever before, our analysis finds that the highest IIHS safety ratings still require costly options in 2020. That’s starting to change, but the cost of buying a car with the most bragging rights is still very high.

Disaster relief. Those affected by some of this year’s natural disasters should be aware that automakers are offering assistance. California wildfire assistance programs like Ford Employee Pricing can save thousands when replacing a car. Similarly, a 2020 hurricane relief program from GM offers $1,000 in savings.

Spooky loan situations. There are some scary scenarios you can avoid when getting a car loan. However, boosting your credit score is possible with some determination because negative items on your credit report fall off after 7 years. Our network of dealers is specially equipped to help those with bad credit.

Upcoming vehicles. Genesis finally revealed the new GV70, a small luxury crossover based on the highly-rated G70 sedan. Whether it’s a redesigned car, truck, or SUV, odds are you’ll find it on our Previews page. That said, as we reported last week, discounts ahead of a redesign can result in substantial savings.

This Month’s Cheapest Lease Deals »



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