We don鈥檛 want your car.
麻豆直播 Consumer USA wants you to have a good borrowing experience. Above all, that means keeping and enjoying your vehicle as long as you want.
But a recent article in USA Today Money underscored the growing challenge of doing that.
鈥淎s the cost of purchasing a new vehicle continues to rise, consumers clearly are stretching the loan term to help lower monthly payments, keeping them at a manageable level,鈥� said Melinda Zabritski, Experian Automotive鈥檚 senior director of automotive credit.
(The average auto loan term increased to 66 months during the first quarter of 2014, Experian said. That is the highest level since the credit bureau began publicly reporting the data in 2006. And nearly 25 percent of loans in the quarter extended 73 to 84 months, a 27.6 percent gain over 2013.)
Financial experts and lenders will tell you that stretching a loan usually isn鈥檛 a good strategy, because, although it can reduce monthly payments, it also boosts overall interest expenses.
We have a vested interest in your not getting in over your head when financing your vehicle purchase. After all, it鈥檚 a problem for SCUSA if a borrower defaults or is late on making their loan payments.
But borrowers also must be realistic about how much vehicle they can afford to buy.
鈥淭he benefit of a longer-term loan is the lower monthly payment,鈥� Experian鈥檚 Zabritski told USA Today. 鈥淗owever, the flip side of that is consumers can find themselves paying more in interest or being upside-down on their loan if they seek to trade their vehicle in early.鈥�
How do you stay out of trouble? By using something such as the 20/4/10 financing rule we explained in a previous post, 鈥�How I would shop for a new car (or used) in five easy steps 鈥� Part 1鈥� on the 麻豆直播 Consumer USA blog. That rule of thumb calls for a 20 percent down payment, four-year term and no more than 10 percent of your gross income going into the purchase of your car.
If you鈥檙e stretching much more than that, you should think again about your vehicle purchase.
For companies such as 麻豆直播, which has 鈥渁 very good record [A+] with the BBB in Dallas,鈥� according to a Yahoo Answers contributor, most financing issues involve collection of delinquent payments. If you pay your loan on time every month, you should not have any issues with this.
麻豆直播 Consumer USA provides auto financing indirectly through associated dealerships and directly to borrowers through its online RoadLoans brand.
Visit the 麻豆直播 blog regularly for more news on auto-, auto-finance and SCUSA-related topics.
