If you are looking to finance a used car in Toronto, you might have some questions about the financing process. It can be easy to become confused by the overwhelming amount of advertising about interest rates and terms of loans. But what does this all mean for you as a car buyer? There are many options to choose from when it comes to financing and the loan option you choose will be highly dependent on your personal financial circumstances and goals.
At Autorama, we want you to drive a car you love. That is why we are committed to providing you with financing options that suit your unique needs. We are always here to help you understand what your options are in terms of financing and help you get into the car of your dreams. In this article, we break down what you need to know about used car financing as it relates to the length of your auto loan.
Credit scores and car buying can go hand and hand. If you are looking to better understand how your credit rating influences the financing rate and term length of your car loan check out our previous article Credit and Car Buying 101.
How Long Can You Finance a Used Car?
When you are considering financing any vehicle, you’re likely attracted to low-interest rates that are advertised by many car dealerships. But the interest rate for your loan is not the only thing that matters when it comes to financing a used car. The length you finance your car for is an important thing to keep in mind when it comes to financing.
There is no right or wrong way to finance a used car and it ultimately will come down to your personal preferences and financial goals. Some people want to finance a car for the shortest amount of time possible to have their car paid off quickly. Others find that having longer terms for their car loan allows them stability in making low monthly, bi-weekly or even weekly payments.
When looking to finance your new car you could consider a term for as short as 12 months to as long as 84 months. The choice is yours, but you should consider that the interest rates will differ based on the length of time you will have the loan for. Many people find that financing a car for between 60-72 months is the ideal term for them as this offers low payment options that work well for different budgeting needs.
Should I Choose a Shorter Term for Financing My Used Car?
Choosing a car loan with a shorter term can be a great option for those looking to spend less money on interest and pay off their car quickly. By choosing a shorter term for your car loan you can expect to spend less on interest, but this will come with a higher monthly car payment. For some, this is the best choice, and many car buyers choose a car loan with the shortest term they can afford.
Whether you should choose a shorter term for your car loan is truly based on your personal circumstances. If you would rather have spaced-out payments that allow you to have more freedom within your monthly budget, you may find longer terms more attractive. Your longer-term loan will offer you smaller monthly payments but will come with higher interest rates meaning that you will pay more for your car in the long run. For many people, the lower monthly car payment is the best option and paying more on interest is not a deal-breaker.
What Is a Good Interest Rate for a Used Car?
Many car buyers would agree that a good interest rate for a used car would be somewhere better 3-6%. If you have good credit you should expect to find a financing option that works for you within that interest rate range. If you are still building your credit, there is no need to worry. There are a variety of great low-credit car loan financing options available for you to choose from. These rates can vary greatly and will be influenced by a variety of factors including your credit score and down payment amount. To determine what a good financing rate would be for you, consider speaking with a used car financing expert.
Just because you don’t have great credit right now doesn’t mean that you can’t drive a car you love. At Autorama, we understand that every customer comes with their own unique financing needs. We are always here to support our customers in finding a car they love at a rate and term that suits their financial needs. Check out our previous post How to Finance a Car with Poor Credit to help you navigate your options while searching for the car of your dreams.