With auto financing, car buyers can buy their dream car without draining their bank account. If you’re considering financing, it’s important to determine the best loan term length for you. Our Volvo finance experts at Fields Volvo Cars Northfield are sharing some helpful tips.
Average Loan Terms
Your loan length, which is also known as your loan term, is typically measured in months. The average loan lasts 60 or 72 months. However, loan terms can range anywhere from 36 to 84 months.
Set a Budget
Before you choose a term, you need to determine what you can afford. Experts recommend keeping your loan payment under 10-20 percent of your take-home pay. We suggest using an auto payment calculator to get an estimate of your monthly payment. You can adjust many factors, from the loan length to the interest rate, to see how your payment is affected.
Securing a Longer Term
With an auto payment calculator, you’ll notice your payments drop as you extend your loan term. This also gives you a lower monthly debt-to-income ratio, which can improve your loan eligibility. However, some lenders see a longer term as a risk, so you’ll likely get a higher interest rate.
Securing a Shorter Term
If you opt for a shorter term, you’ll have higher monthly payments, but you’ll pay off your loan faster. This helps you build up equity in your vehicle faster. Plus, you’ll probably get a lower interest rate, and, since you’re paying off your loan sooner, you’ll also pay less interest overall.
Apply for Volvo Financing in Northfield, IL
With our streamlined Volvo financing process, it’s easy to secure an auto loan at our dealership. We’re happy to help you find a loan with terms that work for you. Visit Fields Volvo Cars Northfield to get started today!