Why a 120 Month Auto Loan Might Not Be the Best Choice

Buckle up, folks! We’re about to take a ride down the bumpy road of auto loans. While there are plenty of options out there for financing your dream car, one that’s been recently gaining traction is the 120 month auto loan. Yes, you read that right – a full decade of paying off your car. But before you sign on the dotted line, let’s explore why this might not be the best choice for your financial future. So sit tight and keep reading; we’re breaking down all you need to know about long-term auto loans!

Types of Auto Loans

Auto loans come in a variety of types, so it’s important to choose the one that’s best for you. Here are three types of auto loans:
2-year fixed rate: A two-year fixed rate is a low-interest loan that you will be able to borrow for two years. This option is good if you plan on keeping your car for at least two years.
3-year adjustable rate: An adjustable-rate auto loan offers more flexibility than a two-year fixed rate, but comes with a higher interest rate. If interest rates increase during your loan term, your monthly payment could go up.
5-year adjustable rate: A five-year adjustable rate auto loan is the most flexible type of auto loan but also has the highest interest rates. If interest rates decrease during your loan term, your monthly payment could go down.

Interest Rates

Auto loans can be a great option for people who need a quick fix for a car. However, not all auto loans are created equal. A monthly auto loan might not be the best choice for everyone. Here are some reasons why:

1) Interest rates are higher on monthly auto loans. A month auto loan has higher interest rates than a standard or long-term auto loan because it is considered a short-term loan. This means that the lender could earn more money if they were to sell the loan sooner, which could impact your chance of getting the car you need in a timely manner.

2) Repayment terms are also shorter on monthly auto loans. With a month auto loan, you have only 28 days to make repayments rather than the usual 360 days with other types of auto loans. This means that if something unexpected comes up and you cannot afford to make your monthly payment, you could end up owing more money in total and have less time to come up with another solution.

What to consider when choosing an auto loan

When you’re shopping for an auto loan, there are a few things to keep in mind. The size of your down payment, the term of the loan, and whether you qualify for a low-interest rate are all important factors. Here’s how each one affects your cost and borrowing term.

Down Payment: The higher your down payment, the lower your monthly payments will be. However, a large down payment also reduces the amount of money you’ll have left to borrow on the auto loan. So make sure you can afford to put down at least 20% of the purchase price.

Term: Auto loans come in a variety of terms, from 6 months to 10 years. The longer the term, the more you’ll pay in interest over the life of the loan. But if you need financing quickly, a shorter term may be better for you.

Factors that could affect your auto loan decision

1. Your credit score.
2. The APR on the auto loan you are considering.
3. The length of the auto loan you are considering.
4. Fees associated with your auto loan, such as origination or processing fees

The Pros and Cons of a 120 Month Auto Loan

When it comes to buying a car, there are a lot of things to consider. Some people might feel that they need a 120-month loan in order to afford the vehicle they want, while others can get by with a monthly auto loan. So what are the pros and cons of a month auto loan? Here are some of the benefits and drawbacks of taking out such a long-term loan:

The Pros of a 120 Month Auto Loan

There are many reasons why someone might want to take out a 120- loan. For one, it can give you plenty of time to pay off the debt. If you have good credit, you may be able to get approved for a lower interest rate on a 120-month car than you would on a month auto loan. Plus, if you do need to let your car go at some point in the future because you can’t afford it or don’t drive it enough, having the full amount owed on your contract will make it more difficult for someone else to buy it from you at auction or through another means. Read more…


When you’re looking to buy a car, it’s important to consider the pros and cons of a 120 month auto loan. With this type of loan, you’ll have the added security of knowing that you won’t have to come up with money immediately if you need to make a large purchase down the line. However, there are several disadvantages associated with signing up for a 120-month loan. First and foremost, this type of loan will require considerably higher monthly payments than other options. Depending on your credit score and other factors, these payments could be significantly more expensive than borrowing through another means such as a credit card or personal loans.

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