Having a car in Canada is essential for every resident, as it comes with a myriad of benefits. When you own a vehicle, you can travel at your speed, convenience, and comfort. Out of all the ways you can purchase a car, going the finance route is the most popular. It breaks down the total cost of the vehicle into affordable monthly payments.
When you have to select the tenure of the credit, you have to choose between short and long-term loans. Here is a small guide which will give you all the information you need about car loan term in Canada:
Short-term loan
When you opt for a short-term loan, it comes with a lot of advantages. For instance, the total amount you have to pay for taking credit is lesser than the long-term variant. On the plus side, due to the shorter duration, you can finish the monthly payments quickly and take a new one. After you finish repaying the auto loan, you can sell the vehicle and get a great resale value.
On the downside, you have to be okay with higher monthly payments, which can put a strain on your budget. With lower funds at your disposal, you need to make sure that you follow sound financial strategies till the end of the tenure.
Long-term loan
Long-term loans are the best when it comes to affordability as it brings down the monthly payments significantly. As a result, these types of credit fit into any budget without putting a strain on your wallet. By spreading out your payments, you can use the additional cash flow for other personal purposes.
The disadvantage of long-term car loans is that you will end up paying a greater amount when compared to the short-term variants. Also, due to the higher interest rate, it may not always be a good idea to go for long-term credit.
Due to the differences between short and long-term loans, you need to select one which meets your requirements. Always weigh your options and take your time, so that the type of loan you pick will improve your credit score!