Short Term or Long Term Car Loans?

BY

BANKBAZAAR.COM

Advantages of a Short-Term Car Loan

Why should you take a short-term car loan?

Short-term car loans offer the advantage of availing a loan deal with lower interest rates, irrespective of the variable EMI amounts. In the long run, a borrower can reduce the total cost of the car, by not paying extra interest amounts and also finish off his debts quickly.

Disadvantages of a Short-Term Car Loan

Does a short-term car loan have any shortcomings?

The only perceivable disadvantage of a short-term car loan is that a customer needs to make a higher down payment in order to shorten his loan tenure. This might not bode well with individuals who have not be saving up adequately and are relying solely on the lender to finance their new cars.

Advantages of a Long-Term Car Loan

What does a long-term car loan offer?

Long-term car loans are suitable to borrowers with limited credit as these kinds of loans require smaller EMI payments with extended loan tenures. This makes a debt affordable and manageable to individuals with low savings and always look alluring to such borrowers

Disadvantages of a Long-Term Car Loan

What hassles will I face with a long-term car loan?

Even though monthly payment amounts are relatively lesser, long-term car loans increase the overall cost of the car with borrowers paying more interest amounts. By the time a customer finishes his loan, the car value depreciates drastically which makes resale a difficult task.

Short Term or Long Term Car Loans?

What do you choose?

Short-term car loans are the best option for borrowers in India. Initially, a borrower might have to bear the burden of paying higher down payment amounts and might also pay higher monthly installments but he will definitely enjoy long term financial benefits.

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