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"Should I go with a longer car loan term if the interest rate stays the same? "
"I got pre-approved for a $25,000 car loan at a 3.52% interest rate through my credit union. The interest rate will stay the same whether I go for a four-year loan or a five-year loan.
Is there any downside to going with the longer-term loan for the lower monthly payments?
"
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“As long as the interest rate stays the same, the two sole downsides of choosing the longer-term loan are:
- The roughly $500 difference in interest charges you will incur
- The greater risk of being upside-down in the last year of the loan (meaning you owe more than the car is worth)
However, this can all be avoided by paying off the loan early if you are lucky enough to have the opportunity to do that.”
View full answer
- Gregory R.
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