Pitfalls of the 7-year auto loan

Pitfalls of the 7-year auto loan

RICHMOND, Va. (WWBT) - About a third of auto loans for new vehicles taken in the first half of 2019 had terms of longer than six years. That’s according to credit –reporting firm Experian. The average size of an auto loan for a new car is now $32,119. Which means- more and more Americans are taking longer to pay off a vehicle.

You may be getting smaller monthly payments, but in reality, depending on the terms, you are paying way more than the value of that vehicle. Cherry Dale with the Virginia Credit Union says-- don’t just look at your potential monthly payment when buying-- so you need to know the overall cost of the loan.

“If you’re able I would encourage people to finance for a shorter amount of time and yeah. Your monthly payments might be larger at the end of the day they’re going to pay less for the overall cost of the car,” said Dale.

And think about this before you sign a 6 or more year car loan, remember, the tendency for a car to break down after 7 years goes way up. Or perhaps take a step back and not get a new car but a slightly used one. so your not trying to finance 32,000.

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