[Nezil]

Originally Posted by omasou

A 7 year loan is roughly equal to a lease payment. If you plan to get out in say 5 years you can usually sell the car at a profit, pay off the loan and still have some left over for a nice down payment on the next car.

Though if buying the car I wouldn't want to exceed a 5-6 year term.

This is why I'm not concerned about having a loan for a longer duration. I have no intention at this point in continuing the loan for the full duration, and will probably pay it off early with a lump some from the sale of my wife's car when we replace hers.

A short while ago, my wife and I agreed to a 6 year cadence for replacing cars, and to alternate replacing each others cars therefore every 3 years. There is some flexibility in the timing, but we'll never have a situation where we have two cars on finance at the same time, and we'll also never pay more than $600 / month.

So I was due to replace my car in March next year, but my M2 will be arriving in late October, so I'm ahead of schedule... According to our agreement, I can only get a new car if I'm able to pay off the existing loan on my wife's car (a 60 month loan, but we're only 18 months into it) and have a big enough downpayment and term to reduce my payments down to $600 / month for the M2.

Fortunately the sale of my current car will pay off the loan on hers, and I have enough saved up to put as a downpayment for the M2, but I need a 66 or 72 month loan to meet the $600 / month limit we agreed upon.

I expect to pay of the M2 in full when we replace my wife's car in about 3 years, but if for whatever reason my situation changes, I'm not stuck with a monthly finance that I can't afford.

A long term and low monthly is sort of an insurance policy for us...