What’s the Ideal Term for a Car Loan?

If you're wondering where you can secure Chevrolet financing near me, you can obtain an auto loan at your trusted Chevy dealership - Gillman Chevrolet Harlingen. As easy as we make it to secure a car loan, it's up to you to pick the term or length of your loan. Luckily, we have some tips that can help you choose the term that works best for you.

Think About Resale Value

The longer a loan remains in force, the more it will drag down your vehicle's resale value, which is an important consideration especially if you're going to trade in your automobile. A five-year-old car will have lost 48 percent of its value while the value of a typical seven-year-old vehicle will have fallen around 59 percent.

Adhere to a Guideline

There's a long-standing guideline for buying a car, and it's the 20/4/10 rule. This rule says you should put at least 20 percent down. It also states that you should finance the remainder of a car's price for no more than four years and dedicate a maximum of 10 percent of your net income to cover the sum of your transportation expenses.

Many drivers rail against that guideline when they contact our Harlingen, TX Chevy dealership because the short term makes their monthly payments too high. With that in mind, the 10 - 20 percent rule may be more useful. According to this guideline, you should devote no more than 10 - 20 percent of your take-home pay to cover your transportation costs.

Consider Interest and Finance Charges

Clearly, the 10 - 20 percent guideline doesn't suggest a loan term, leaving it up to your discretion. Whether you buy one of our used cars or a new Chevrolet model like the Chevy Silverado, you can finance your purchase over 12-month increments that range from 24 months up to 84 months.

Choosing a longer term will lower your monthly payments, but it will increase the amount you pay in interest and finance charges. Since you'll pay more over the course of your loan, your total cost of ownership will be higher, significantly so in many cases. To avoid overpaying for an automobile, Edmunds suggests that the ideal term for a car loan is 60 months or less.

Finance Your Next Vehicle in Harlingen, TX

Are you ready to purchase a new Chevy vehicle or a pre-owned model? Work with our resident experts to secure an auto loan. We'll help you pick the most advantageous loan term and get you behind the wheel as early as today.