How long should a vehicle be finaced for?

Question

I know there are a number of options when it comes to finance options, (36,48,60,66,72). Which is the best option and why? Keep in mind if I may think about trading it in after 2 to 3 years. I drive a lot of miles this is why I tend to not lease.

I was thinking pay it off quicker, but I could be wrong.

Answer 1

It all depends on your financing (I have no idea what that one guywas saying about taxes).  If a 48 month loan is at a lower rate than a 60, then it's a no brainer.  0% is allways optimal but not always offered.  On the other hand if a 60 month is just slightly lower than a 48, go with the 48 as you will avoid an extra year of interest.

If you decide on accelerating the payments, keep in mind the costs/benefits of doing so.  For instance, I just got a 60 month loan at 4.49%.  My mutual fund has been averaging 13% so instead of paying off the car quicker, I've been putting any extra money into the fund.

Whatever you do, don't go with a loan that is longer in term than your warranty.  In general, I think 48 or 60 month loans are the best.

Answer 2

60 months (5 years) has become the new standard.  Any longer than that is way too long.  If you can afford the monthly payment it is wise to limit your term to 48 months (4 years) or less.

Answer 3

Interest rates and special financing deals are usually for certain number of months/payments. To get the best rate, ask the dealer what their offering, as well as your bank...are there any incentives? Rule of thumb, never finance for longer than necessary to get to a comfortable payment...never more than 60 mos., 36 or 48 is optimum.

Answer 4

It used to be 24 months, then 36, and now banks love to extend the finance period as much as possible to make more money on the interest. They tell you is good for you because your monthly payments are less... but don't fall on this trap. The sooner you pay your car the less expensive it is for you at the end.

Answer 5

As short as you can possibly afford.  Shorter is cheaper in the end.

Answer 6

As short as possible, and you should then drive it for as long as possible.  Having no car payments is a very good thing.

Answer 7

mine was 66 months but thats because i didnt give no payments. the longer the cheaper but more taxes are taken out. the shorter, the more ur payments are gonna be for but its not that many taxes.

Answer 8

You forgot 84 months, some banks will finance for that long.  Your question should only be answered when given the interest rate.  If the car you want has 0% for 36 then 36 is the best, unless the rebate beats the interest otherwise to be paid.  Most of the time, it's according to your wallet, what you can afford monthly, 60 is the norm, although 72 has become very popular.  I suggest no longer than 60.