The Risks Associated With Long-Term Car Loans

Long term auto loans – those 72 months or longer – are becoming increasingly popular, since they, according to a recent USA Today report, “seem more affordable”. In early March, a whopping 33.1% of all loans were long term.

Even though long term auto loans appear at the outset to be a better deal, these “leave buyers with higher overall costs for the car and more time owing more than it is worth.”

NBC News hinted that this statistic is actually a trend that can inflate to become a bubble that “sounds suspiciously familiar,” referencing the auto market before the 2008 economic recession.

Using a recent report from Standard & Poor, NBC News said that since the average new car is unaffordable for the average American family in 24 of the 25 largest U.S. metro areas, the number of loans packaged into securities with borrowers more than a month behind on their payments rose to its highest in three years.

A better low-risk option than a long-term auto loan – and that’s actually statistically cheaper in the long run – is to lease a vehicle instead. It’s evident that the market realizes it’s true, as leasing is currently setting new record highs in numbers.

And an even cheaper option than leasing a vehicle off a lot is to take over a lease on Since the vehicle is currently under contract, often you don’t have to pay a down payment or other taxes and fees. All you pay is a simple and low monthly payment.

For example, three hot commodity cars that are currently up for a takeover include:

  • 2014 Mercedes Benz C-Class $247 per month/27 months
  • 2012 Cadillac CTS $314 per month/19 months
  • 2014 BMW 5 Series $359 per month/36 months

Each of these carry little financial risk, compared to a long-term auto lease. In a lease environment you don’t have to worry about the long-term depreciation on the vehicle – something that hurts owners that eventually wish to sell or trade their vehicle. Plus, they will free you up from a long-term commitment. If you want a breath of fresh air or the newest technology, you can do so much quicker with a lease versus an auto loan.

For more information on finding the best car lease deal or to learn how you can have a successful car lease trade, contact at 866-SWAPNOW.