Do you really know how long is too long when applying for a new auto loan? According to many studies, the answer to that is no. Too many buyers nowadays are looking for the longest auto loan possible, without looking at all that it entails. The average auto loan is now around 70 months, which is up from the standard 60 months just a few years ago. There have even been reports on 9 year loans taken out for the higher price vehicle. The trend of getting a longer auto loan for a more expensive car is one that is more than a little troubling.

Quite simply, the longer you take a loan out, the more interest you pay. Therefore if you buy a $30,000 vehicle, which is about the U.S. average, and you take an auto loan for 7 years you are paying approximately $38,000 for that car and that is only if you have excellent credit. The worse your credit, the more you are going to pay. By changing a 7 year loan to a 4 year loan, it will save you almost 50% in interest!

Not only will you be saving money on your auto loan, but you will also be helping the value of the car considering most people won't keep their car more than 3 to 5 years. That means you may be what is called "upside down" on your car loan with no down payment. Being upside down means that you will owe more than it is worth. That makes it harder to trade it in, and will cause you higher auto loan payments not only for the car you are in now, but the cars in the future. Next to buying a home, an no down payment car loan is one of the most expensive purchases you will make, so make sure you are doing the right thing for your investment and your future.

John Sims is a financial analyst and educates in the fields of a no down payment car loan.