Getting a Short Term Car Loan
If you’re thinking of getting a car loan, one of the most important things you need to consider is the term, or the length, of the loan that you’ll take.
Generally, a short term car loan is around 36 months, meaning that in just three years you’ll have paid back the total amount owed on the car. There are certainly advantages to a short term car loan, but you need to figure out if it’s right for you and your circumstances.
Speak to us to understand the best type of car loan for you. We have decades of experience with short term car loans and you can speak with a broker who will have access to a wide range of loans.
Advantages of short term car loans
For people who want to own their car quickly and to free up their money after just a few years, short term car loans can be a good option. There are several benefits to opting for a short term car loan including:
Paying lower interest rates
Short term car loans generally offer lower interest rates. This is usually because a short term loan poses less of a risk for the lender of the borrower defaulting on the loan.
Lower interest rates can mean that you pay less over the course of three years than you would if you opted for a long term car loan.
Get out of debt faster
By paying off your car loan in around 36 months, you will be free of debt much faster than if you’d opted for a long term car loan.
You may need to commit more financially to the short term car loan for the three years you are paying it, but once it’s over, you’re free to spend money elsewhere.
Avoid owing more than the car is worth
This is not an ideal situation to be in and with a short term car loan you can be confident that you will avoid owing more money than the total worth of the car.
You want to be in the position where you are paying the debt back at a faster rate than the car is depreciating at. Always keep an eye on the value of your vehicle just to be sure.
Get access to your money faster
Once your short term car loan is paid off, you’ll be able to access your money in a way that you simply wouldn’t be able to with a long term car loan. So get planning how you’ll spend or save it!
Disadvantages of short term car loans
There’s always going to be a flipside, and short term car loans won’t suit everyone. For those who need to have access to a financial safety net or can’t tie large amounts of money up straight away, you may need to look away from short term car loans.
We can help talk you through the whole range of car loans, and extended car loans of lengths between 48 months and 60 months may be better for your situation.
If you are considering choosing a car loan that is longer than 60 months, you should think very carefully about whether you can actually afford the car that you are trying to purchase. This length of loan is generally not recommended and you’re likely to encounter very high interest rates.
Large down payments
With a short term car loan, it’s more likely that your lender will ask for a large down payment. This means that you will need access to a relatively large lump sum to get approved for a short term car loan.
Money tied up
You need to be absolutely sure that you won’t be stretching yourself financially with a short term car loan. Short Term car loans tie your money up substantially for the period of the loan, so you need to make sure that you have budgeted accordingly and left yourself with a financial safety net if any unforeseen circumstances arise.
Making your decision
We are on hand to help you in the process of finding the right loan for you. If you’d like to discuss whether short term car loans are the right choice for your circumstances, contact us today to speak to one of our brokers and benefit from our decades of experience. We can help you find the right car loan for you.