Shorter Auto Loan Terms and the Long Term Benefits

Changing the length of your auto loan terms will affect both your interest rate and your monthly payments. Your monthly payments will likely be higher, but the interest rates will likely be lower. This means your loan will be less expensive in the long term among other benefits: 

You will pay the loan off sooner, bumping up your credit score. If you are seeking a larger loan in the near future, such as a home loan, paying off your car loan first is a great way to build your score.

You will have more equity in the car sooner. This means you can opt to sell it at any time and move to another car. It also means you can use the equity in your car as collateral for other loans.

You will show good faith to the lender, meaning you may receive faster approval. If you are seeking a loan directly from the lender, you may see discount incentives. 

 


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