In an effort to minimize their involvement in the Leasing business many auto finance companies are switching to longer term car loans. Now you can get a car loan for as long as 84 months (7 years), holy terms batman! Manufacturers such as Ford or GM are loving the long term loan avenue because they need to knock the dust off those inventories that have been serving as paper weights.

So what are the benefits of long term car loans to you?  Well there is really only one! The one and only reason you opt for long term financing is your payments will be dramatically reduced and in this economic climate every dime counts.  If you plan on keeping the car a long time then why not go this route so your household budget doesn’t take such a big hit. It used to be that leasing a car always painted a more attractive picture financially but due to recent credit crunch, dipping resale values and the general overall economic mayhem this country is in leasing has lost its sex appeal.

According to a Kelley Blue Book study, six out of 10 new-car shoppers are now opting for longer-term loans. But be careful because this loan route has it’s own set of pitfalls, such as

• They most certainly will have higher interest rates.
• Your payments may be lower but a huge percentage of the payment will consist of interest.
• Since you’re making payments for a longer period, you’ll pay way more interest over the life of the loan.
• Since you’re paying more interest each month, you’re also paying back less of the loan principal. So in essence you are putting yourself upside down (You owe more than the car is worth) much quicker.

but, before you take out a longer-term loan, consider some ways to lower your monthly car payments without raising your long-term costs, such as

Get pre-qualified: It’s a good idea to get pre-qualified for an auto loan before going to an auto dealer. You may get a better interest rates than the dealer can provide and going in with an approval in hand gives you more bullets for your gun.

Look at the numbers: You absolutely want to know the real long-term cost of the loan before you sign on the line. Make sure you check the annual percentage rate (APR).  Also ask the lender for the total cost of all the monthly payments you’ll make during the life of the loan, plus all fees and charges.

Increase your down payment: The more you put down the lower your payments are, about $20.00 per thousand you put on the table.

Buy what you can afford: Now I shouldn’t have to say this but since most of us have eyes bigger than our wallets this needs to be put out there. Listen If you’re tempted to take out a longer-term loan, it probably means you can’t really afford the car you’re buying. Don’t be offended it’s just reality.  You’d be way better off  buying  a more modest vehicle you can pay off in five years or less. So don’t get the leather and sunroof, I promise you’ll survive.

• Hybrid Car Reviews - 2010 Toyota Prius The all-new 2010 Toyota Prius offers no surprises, just significant improvement. It's sleeker and better looking, and more powerful while...
• Car Paint Work? Spot the Signs of previous damage. Shopping for a pre-owned vehicle has many benefits as well some pitfalls not found in new car shopping. One of...

• Iceland Rejects Icesave Depositors Bill in Referendum [/caption] Icelanders rejected by a massive majority a bill that...
• The Dangers of Long Term and Interest Only Loans There are two new trends in the banking world that...