![]() Here are few tips from financial experts: DO THE MATHĪ lower monthly payment may seem attractive now, but a longer term loan will end up costing more in interest, likely at a higher rate to compensate the lender for additional risk. "Be very wary of extending the life of your loan, just to make it affordable in the short-term." One principle applies, no matter what the asset, Rheingold advised. It can be a solid foundation for family wealth if fixed at a low rate for an asset that appreciates over time such as a 30-year mortgage. Stretching out a loan is not always a bad idea. Homeowners straining to pay their Federal Housing Administration (FHA) mortgages can now apply to have their loans extended to 40 years to reduce monthly payments.įor personal loans closed through the LendingTree platform, the median term in May rose to 60 months from 57 months in April, and 54 months in March. Ultra-long loan terms are showing up in the housing market. "It's the same thing with housing: Sometimes the only way to get someone into a house is to increase the mortgage length." "More and more dealers are offering extended loan terms: Instead of three or four or five years, they are now going way beyond that," Rheingold added. "It's a reflection of the world we live in: Transportation affordability is a significant problem, as is housing," said Ira Rheingold, executive director of the National Association of Consumer Advocates. A few borrowers are going even longer, with less than 1% of new car loans lasting 85 months or more. New car loans lasting 73-84 months (over six years) rose to 34.4% of the market in 2022 from 28.6% in 2018, according to auto information site Edmunds. But if you must go ahead, either face taking on a big monthly payment, or stretching out the loan term to keep the monthly bill down - as many are doing. None are particularly attractive.īuyers of homes or new cars might be better off waiting. ![]() NEW YORK, June 5 (Reuters) - Consumers facing high asset prices and rising interest rates have a few loan options.
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