How Long is the Ideal Car Loan?

Nissan terra

Almost anyone can afford to buy a brand-new car in the Philippines due to the aggressive promotion of low downpayment promos, cash discounts, and other payment options. Regardless which type of car promo you prefer, the main objective of these deals is to make the payment option more financially flexible and convenient. However, you need to be a smart buyer as payment terms involving brand-new cars could be a headache. With that in mind, what is the most ideal payment duration when you're looking to buy a brand-new car? In the Philippines, the usual maximum length for a car loan is five years (60 months) but, you can opt to take the shorter loan period of three years. Which is better? Five or three years? If you have the means, taking a shorter loan period of three years is the better choice. Here are three reasons why.

Lower Interest Rate

Three year loan has a lower interest rate as compared to a five-year plan. As such, you'll save more money in the long run because interest rate is relatively cheaper. The only downside of the three-year plan is you need to pay higher monthly payments but then again, if you have the resources, it is the better choice.

Be debt free earlier

The shorter car loan payment will give you the chance to be debt-free at an earlier date. Driving a car that's already fully-paid is a greater feeling as compared to worrying about your monthly payments that will lasts for two more years. Moreover, car ownership involves other costs such as fuel, maintenance, registration, among others.

Car's resale value

The duration of the loan term can also affect the car's resale value. If there's an emergency and you need to sell your car, a paid loan will enable you to sell it easier and faster. On the other hand, if the loan is not yet paid, you can't pass the payment terms to the buyer. You will still be the one responsible to pay those monthly payment--imagine if you opt to get a five-year car loan and you find yourself in a similar situation.

Tip: The first thing you need to do before you even consider buying a brand-new car is to set your realistic budget and stick to it no matter what. By doing this, you'll be able to determine the right expectation as to what brand-new car you can afford. After which, do a thorough computation of the payment terms. If the monthly payment is too high, consider your options as you might be aiming to buy a car that's beyond your budget. However, if you really love that certain car, the next best thing to do is to wait for around two more years and save more money so that monthly payments will not be much of a problem.

Read All

Featured Articles

Recommended Articles For You

Read All

Car Articles From Zigwheels

  • News
  • Article Feature
  • Advisory Stories
  • Road Test
  • ACMobility guarantees worry-free electrified mobility EV models, charging hubs
    ACMobility guarantees worry-free electrified mobility EV models, charging hubs
    Ruben Manahan IV . Mar 28, 2024
  • LTO announces DL renewal schedule, to commence after Holy Week
    LTO announces DL renewal schedule, to commence after Holy Week
    Paulo Papa . Mar 28, 2024
  • GAC Motor PH to reveal Emkoo Hybrid
    GAC Motor PH to reveal Emkoo Hybrid
    Ruben Manahan IV . Mar 27, 2024
  • Toyota PH offers emergency roadside assistance for Lenten season anew
    Toyota PH offers emergency roadside assistance for Lenten season anew
    Paulo Papa . Mar 27, 2024
  • Honda Cars PH reactivates HEAT for Holy Week
    Honda Cars PH reactivates HEAT for Holy Week
    Paulo Papa . Mar 27, 2024
  • Brembo: an ideal choice for discerning Filipino car owners
    Brembo: an ideal choice for discerning Filipino car owners
    Paulo Papa . Mar 26, 2024
  • Flyweight feud: Suzuki S-Presso AGS vs. Honda Brio V CVT
    Flyweight feud: Suzuki S-Presso AGS vs. Honda Brio V CVT
    Paulo Papa . Mar 20, 2024
  • Cabin check: What’s inside the BYD Atto 3
    Cabin check: What’s inside the BYD Atto 3
    Paulo Papa . Mar 19, 2024
  • Midsize SUV battle: Hyundai Santa Fe vs. Ford Everest
    Midsize SUV battle: Hyundai Santa Fe vs. Ford Everest
    Paulo Papa . Mar 14, 2024
  • Hyundai Santa Fe: 6 seductive colors
    Hyundai Santa Fe: 6 seductive colors
    Paulo Papa . Mar 12, 2024
  • Here are some ideal destinations and safety tips for the upcoming Holy Week
    Here are some ideal destinations and safety tips for the upcoming Holy Week
    Paulo Papa . Mar 08, 2024
  • Here are some New Year’s resolutions for car owners
    Here are some New Year’s resolutions for car owners
    Paulo Papa . Jan 03, 2024
  • PH auto market: 2023 in retrospect
    PH auto market: 2023 in retrospect
    Paulo Papa . Dec 15, 2023
  • Here’s a holiday gift guide for car enthusiasts
    Here’s a holiday gift guide for car enthusiasts
    Hazel Nicole Carreon . Dec 15, 2023
  • Oil players cut pump prices anew
    Oil players cut pump prices anew
    Paulo Papa . Nov 14, 2023
  • First look: JMC Grand Avenue
    First look: JMC Grand Avenue
    Paulo Papa . Mar 27, 2024
  • Above average: Toyota Raize G
    Above average: Toyota Raize G
    Paulo Papa . Mar 22, 2024
  • BYD Atto 3: from the metro to the mountains
    BYD Atto 3: from the metro to the mountains
    Paulo Papa . Mar 18, 2024
  • Late bloomer: Hyundai Stargazer GLS Premium
    Late bloomer: Hyundai Stargazer GLS Premium
    Ruben Manahan IV . Mar 08, 2024
  • Adventure-ready: Subaru Crosstrek
    Adventure-ready: Subaru Crosstrek
    Paulo Papa . Mar 01, 2024