Credit Department | Leasing vs. Purchasing | Extended Warranties
Short Term vs. Long Term Financing | Quality Care Maintenance Protection Plan

Short Term vs. Long Term Financing

When you purchase a vehicle you need to ask yourself a couple questions:

1. How many years do I plan to keep this vehicle?
2. How Many kilometers will I have driven by then?

These two questions will determine how long you should take to pay for your next vehicle purchase.

I believe the biggest mistake a person can make is paying for a vehicle for too long.

You pay less interest on a shorter term.

You "keep up" with depreciation much easier on a shorter term.

Your payments are lower on a long-term loan, but in most cases the interest charges are more than double when you compare a three-year term versus a five-year term.

The really scary thing is that there are six-year, seven-year and even eight-year loans out there now.

Picture this:

You drive 20,000 km in a year and your FULL warranty only lasts 60,000 km. You are financed over six years. In three years your warranty is over and for the next three years all repairs are going to cost you over and above your bank payment.

Does that make any sense?

You chose the six-year term because you couldn't afford to buy the vehicle over three-years right? Well if you couldn't afford the $50 a month who is going to pay for your $5000 transmission? Visa, Amex, MasterCard ... 18% anyone?

Extended warranties will usually fill in that gap, but even a warranty can't fix a term that is just not right for you.

If you want to know more about how to plan your next purchase, please feel free to give me a call.

Jeff White.

Apply for Pre-Approved Credit Now...
...through our Secure Server.
Click Here Now!