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Short Term or Long Term When Purchasing a New Car?

last updated December 30, 2014 by

When you are purchasing a new car, there are a wide variety of factors to consider. These decisions aren’t just about the type of car to buy, but also about the types of auto loans that are available. Many people find themselves unsure in deciding the specific type of auto loan, often overwhelmed by the vast network of options and constant changes. However, when all is said and done, there are two general categories under which auto loans can fall: Short Term and Long Term.

As their names suggest, these categories contain shorter term auto loans and long term loans, respectively. But the question still arises: Which type of auto-loan is right for you? Here are some of the differences between the two types of auto loan lengths and why they may or may not be right for you.

Short Term:

First, let’s take a look at the short term auto loans. Short term loans may be best for those that are looking for bad credit auto loans. When obtaining bad credit auto loans, you have to pay close attention to the interest rate that is charged. If you can pay your car off quicker with a short term auto loan, you can avoid some of the additional interest that may be charged.

Another reason to consider a short term auto loan is if you do not plan to keep your car long. Ask yourself just how long you are planning on keeping your new car. If you plan to exchange your new car for an even newer car in just a couple years, you are much better off in getting a short-term loan.

However, in contrast to these positives, there is a downside to short-lived auto loans. First, these they may have rather high monthly payments, especially if you are obtaining bad credit auto loans that may have higher interest rates. If you are on a tight budget, a short-term auto loan may not be right for you and could end up hurting your credit.

Long Term:

Now, let’s take a look at long-term auto loans. One of the positives about longer loans is a lower monthly rate. The future can be uncertain, and should you run into trouble with money, you will want a monthly loan payment that is as low as possible so that you are not forced to give up your car. When faced with uncertainty, the longer but lower loan agreement may be a better option.

Another benefit of long-term loans is that you may end up paying a lower down payment on your actual car. Borrowing more money will often lead to paying back the loan over a longer period of time. A long-term auto loan may bring you closer to getting the reliable vehicle that you need by making the down payment less of an obstacle.

Out of Time?

For those in a rush, here’s a quick comparison of the pro’s and con’s for each auto loan category:

Short-Term Auto Loans


  • Quicker To Pay Off
  • Less Interest To Be Paid
  • Easier To Later Buy A New Car


  • Monthly Payments Can Be Quite Costly

Long-Term Auto Loans:


  • Lower Monthly Payments
  • Lower Down Payment


  • Higher Interest Rates
  • You May Have To Wait To Later Trade The Car In

Consumer preference will obviously vary. Some auto loan seekers struggle with poor credit, while others may adhere to a strict personal budget. Through every unique financial situation, continues to provide access to bad credit auto loans and convenient online auto loans. Visit our homepage to get started today or visit our blog to further prepare for your own auto loan experience.