Why should you stay away from Extended Car Loan Terms?

“Extended-term loans are stupid not just for us, but for the industry.”
- John Mendel, Honda’s U.S. sales chief
at the 2015 North American International Auto Show

Mr. Mendel elaborated that competitors are doing stupid things to increase sales and it includes seven-year long loan terms. He said that automakers are selling more vehicles by offering 84-month loans that decrease monthly payments and make it difficult to repay the loan faster. He added, “You’re ringing the bell on a new-car sale, but that customer is saddled — they’re stretched so thin.”

John Mendel’s interview has highlighted a very important aspect of the current auto financing world. Several auto financing companies are offering extended loan terms to increase their sales. They are attracting customers by emphasizing on lower monthly payments but deliberately ignoring the high interest rate part of the deal.

What is the Reality of Extended Loan Terms?

Extended loan terms or longer loan terms are attractive because they allow you to buy an expensive car while making smaller payments. But, before you opt for such a loan program, it is important to understand its reality.

• The upside down loan situation

Upside down car loan means that you owe more to the lender than the car’s actual worth. It is a very dangerous situation because if your car is written off in an accident, you will still have to pay the loan amount. It means you will have to pay money for a car that you no longer drive.

If you opt for a longer loan term and smaller monthly payments, you will end up with an upside down car loan. It is because lenders will direct monthly payments towards the interest and will not reduce the principal amount.

• The negative equity situation

When you buy a car, its value depreciates quickly in the first few years. And, if you opt for extended loan terms, you make smaller payments. It means the outstanding loan balance doesn’t reduce quickly. It creates a situation of negative equity. Remember that it is harder to trade-in a car with negative equity because it doesn’t have the power to reduce the new asset’s cost.

• The higher interest payments situation

SCENARIO -1 – Suppose your loan amount is $20,000. If the interest rate is 5% and the loan term is seven years, then you will pay $3,744.97 in interest.

SCENARIO -2 – Now, let’s assume that your loan amount and the interest rate is same as Scenario-1. If the loan term is reduced to four years, you will end up paying $2,108.12 in interest. So, it is advisable to opt for a shorter loan term and save money in the long term.

Now that you have understood the reality of extended loan terms, it is advisable to you stay away from it. Remember that it is always the bigger picture that matters.

A free tool to get accurate rates on insurance

For example, if you are thinking of buying a new 2015 Toyota Camry, you can plug it into the calculator and along with a few simple questions, get a good idea of how much your rates will be. Insurance rates vary from company to company and are contingent on many factors that calculate your rates. Knowing rates first hand, before you get an actual insurance quote, will allow you to get an average price range you can then use while making a final buying decision. Car Insurance Estimates can save you money A good car insurance calculator should give you an average price for auto insurance by using a few variables. These often include your marital status, zip code, credit rating and your vehicle. By tapping into a large data pool of prior automobile policy pricing, you will be given an expected car insurance estimate in just seconds.

Some more advanced auto insurance estimators can give you the name of the lowest priced insurance company for your insurance profile. Next, if you like, you can choose to get a full quote with the company that offered you the cheapest insurance estimate. You can save even more by taking advantage of the many discounts most insurers offer such as defensive driving course, teacher, alarm system and even discounts of up to 3% for air bags. How to use a Car Insurance Calculator One of the best uses of car insurance cost calculators is pricing. No two insurance companies are alike. When you are shopping for the best car insurance, you don’t need to spend days getting quotes from every car insurance carrier, that would take way too much of your time. With a free car insurance estimator, you can find out exactly who has the lowest rates in the area you live, in less than one minute. You can then use this information to compare any other rates you might get and see if any company can match the price. How Car Insurance Calculators work Your insurance rates are determined by numerous factors such as:* Your driving history* The area you live* Your daily commute* Driving history* Your sex * Your credit rating* Your age * Your vehicle – including its year, model and make These are the main factors that are used to get your car insurance estimate. While no car insurance calculator can give you the exact pricing of an actual insurance company quote, it will give you a “ballpark” rate, which you can then use to compare other offers. Other factors that might not be used for your auto insurance estimate are coverage choices, such as deductible amounts.

It is often recommended to get a higher automobile insurance deductible to lower monthly premium costs. If you end up going for a higher deductible, then you might be able to get an actual insurance rate the beats your lowest car insurance estimator number. Just remember that an auto insurance calculator will give you only an estimate, that can then be used as a pricing gauge. You should then try and get an even lower insurance quote, once you start applying for insurance. Online Auto Insurance Calculators It’s easier than ever to get an auto insurance estimate online. Sites like Goodtogoinsurance.net/calculator/ will give you a very accurate insurance estimate, along with a full car insurance quote.

Northeast Los Angeles (NELA) Art Gallery Night

While Eagle Rock is a community long known for being “artsy”, the flood of new and younger homebuyers are populating neighboring communities like Highland Park and Mt. Washington. And judging from the range of successful businesses also sprouting in and around town, they enjoy coffee, micro-brewed beer, vegetarian food and … art. Small, independent art galleries are surging in popularity.

Though some art galleries have been around a while, most have appeared since the epic housing market that made homes in highland park a safe and sure investment guaranteed to bring about a healthy return. As homebuyers have remodeled their homes, several have found themselves in the local art galleries looking for interesting art with which to decorate their homes.

North East Los Angeles (NELA) hosts a “Second Saturday Gallery Night” once a month, put together by NELAart. NELAart is a collective of art galleries and organizations whose aim is to promote the thriving arts community in NELA. This night is a self-guided tour of the artist-run project spaces, galleries, and non-profits found in Eagle Rock, Highland Park, Glassell Park and Cypress Park communities. Here are seven popular galleries that are filled with fascinating displays of art.

The MorYork studio is full of art built with recycled material. Clare Graham is the mastermind behind these works of art. His displays range from chairs and tables built with dominos to lounge chairs made of soda cans. His bottle cap urns and tin can mirrors bring creativity and green thinking to a new level.

The Avenue 50 Studio found in Highland Park is a studio inspired by Latin Chicano culture. The citizens of Highland Park are primarily of Latin descent, and Avenue 50 Studio is committed to showcasing this ever growing, established culture. People of color who are not yet represented in mainstream galleries display their art here.

The artists at Matters of Space specialize in building custom furniture in order to feed their consumer’s inner creativity and personal taste. Matters of Space designs an assortment of furniture for residential places, restaurants, and businesses. They also put on showcases displaying art from designers and artists around the world.

Public Fiction is a gallery that renews its topical series every 3 months. Public Fiction is one part physical space and one part print work. The physical site is stocked with art installations, performances, and happenings on their current topical series. The print work combines pieces of the installations with new contributions to produce a document to complete the topical series.

Museum & Crane is a private art gallery located in Mt. Washington. This is a backyard gallery, which is invite only to create an intimate environment to display contemporary art in all forms. This space assimilates live music and multi-disciplinary performances with art exhibition to generate a magical atmosphere in which artists and friends can inspire and collaborate together.

Leanna Lin’s Wonderland is a playful jewelry studio, shop and art gallery in Eagle Rock. Leanna combines modern and retro designs of jewelry, which can be found, on display and for sale in the back of the store. Leanna also hosts pop-up events and workshops on how to create unique, beautiful jewelry. This is a great idea for a private party or get together.

An artist and his three sons established the Judson Studios of Highland Park in 1897. The Judson family proudly continues to run this studio today. Judson Studios produces original, hand crafted stained, architectural and leaded glass artworks. They can create glass artworks in windows, signs, domes, fine art pieces, and skylights.

NELA is full of unique, individual art galleries and shops. Attending the Second Saturday Gallery Night is an opportunity to support our local artists and enrich ourselves in the art culture of our community.