How to Finance Your Dream: the Auto Loan (cont.)
Contributed by Boo Roberts
What are the general terms of an auto loan?
The terms of an auto loan are usually that you make so many payments each month at a certain interest percent. The most common terms of auto loans are for forty-eight months, or four years. I have heard that people also sometimes get an auto loan for sixty months, or five years. To me, that seems too long. By the time you have had your vehicle for that long, you are probably thinking about getting your next car, or truck, or SUV.
I know there are auto loans for as few as three years, but sometimes that can be too much. I think a good way to bypass the whole auto loan thing is to pay cash for your car. Save and save all you can, make the car you have now last for as long as you can, and then try to get a car without taking out a loan. You don't have to buy a new car, you can get an older car.
Plus, if you have taken good care of the vehicle you have now, you will get a good trade-in amount on it, and that can be put toward the purchase of your vehicle. Getting an auto loan to finance a car is all well and good, but when at all possible, you should always try not to incur more debt. That is really a better dream than buying a brand new car: always try to remain debt-free.
