Car Loans Explained

Obtaining a car / auto loan is the usually the second largest obligation an individual makes. Make sure you know what you are getting into with your new car loan.

Almost every bank and credit union offers some type of auto / car loan program. These programs have grown in length over the years and it is not uncommon to see a six year term on an auto loan for more expensive automobiles. Even a term of seven years or more for classic cars and "high line" autos.

If you take out a six year auto loan you could find yourself "upside down" in a couple years when you plan to sell. If you opt for this length of loan - make sure you research depreciation rates on cars and choose wisely.

It has also become easier of the years to obtain high priced automobiles with interest rates being so low. People often think they can buy a nicer car for the same monthly payment and cost as when the rates were higher. This is simply not the case. Consumers need to remember that "high line" vehicles are higher maintenance and more expensive to maintain. Tires can cost double or triple more than economy cars and even the smallest parts can cost more just for the name.

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