NORTHAMPTON, Mass. (WWLP) - If you're in the market to buy a car, you now have the option of an eight-year-loan to pay off your loan. However, finance experts told 22News that type of loan may be more trouble than it's worth.
According to Experian , more borrowers are choosing to take longer to pay off their car-loans. Lenders are offering loan terms that can range from 65 to 90 months; 90 months is seven and-a-half years.
UMass Five College Credit Union's Chief Operating Officer, Rich Kump, says if you're looking to get that type of loan, you're looking at the wrong car.
Kump told 22News you'll lose money if you commit to an eight-year auto loan. "The car is depreciating faster than the balance of your loan. If you look at a five-year-loan and compare it to an eight-year-loan, and typically that eight-year-loan is going to have a higher interest rate. They will be paying more than double the amount of finance charges they would otherwise, long term loan."
Kump says when buying a car, do your homework and shop around for the best rates. He also says understanding how your credit score affects interest rates can help you find the loan that best suits you.