Today, most car owners take out their cars on auto loans. However, many of them struggle with managing their monthly payments, and they have no option but to extend their loan terms until their monthly payments are affordable. But not many people know what happens when they extend their auto loan term.
So if you find yourself wondering, “what happens if I extend my auto loan term?” read on to find out about the good and the bad that come with extended auto loan terms.
What Happens If I Extend My Auto Loan Term?
Extending an auto loan results in a higher overall cost for your car. While you may get temporary relief in your monthly payments, you end up paying a higher price in the end.
Here’s what happens if you extend your auto loan term:
1. You Get Lower Monthly Payments
This is the most obvious and perhaps the only benefit of extending your auto loan term. You get to pay lower monthly payments and get some relief. If you are finding it difficult to pay your monthly payments on time, you can apply to extend your auto loan term and get an affordable monthly payment. Although you will end up paying more in interest, in the end, it is still better than not being able to pay your monthly payments at all, which can get you a bad credit score.
2. You Will Be Paying for a Longer Time
Extending your auto loan term means that you will have to pay for a more extended period of time. Instead of paying off your auto loan quickly and being free of stress, you will be making payments for more than 60 months, which will also affect the equity value of your car.
3. You Will Be Paying More in Interest
Getting your loan term extended means you will end up paying more in interest over the life of your auto loan. You will have to pay more than the car’s actual value, which can add up to thousands of dollars in additional costs.
Now that you know what happens when you extend your auto loan term, we hope you can make the right decision for yourself. You should avoid extending your auto loan term if it is not absolutely necessary.