What is an Auto Loan Term?
The loan term refers to the length of the repayment schedule. Common terms for auto loans can range between 24 to 84 months. Generally, the longer your loan term is, the lower your monthly payment will be. While this is advantageous for those looking for a lower payment and can fit it in their budget, but keep in mind you’ll likely end up paying more because the APR will typically be higher.
Some financial institutions offer the option adjust your auto loan’s terms through a refinancing process. But the viability of this option will change depending on your particular financial situation. It can make sense to refinance in cases where you didn’t get the best offer, interest rates have dropped, or you can’t keep up with payments, but refinancing isn’t an option for everyone, nor is it always optimal. There are circumstances where refinancing may not be in your best interest. For instance, if your vehicle has significant wear and tear, refinancing your loan may put you at risk if the vehicle ends up needing major repairs. Additionally, if origination and other loan fees outweigh the benefits of a lower APR or monthly payment, refinancing may not be worth it.