Credit Center: Learn

Although car loans run much shorter than home loans — typically three-to-five years instead of 30, for instance — choosing one is still an important decision. Before you go too far down the research path, read on to identify five signs you might love a loan.

1. You typically put a lot of miles on your car.
When you lease a car there are restrictions placed on how many miles you can drive during a given year. If you go over the agreed upon number, you pay a fee at the end of the lease, usually charged per mile. With a loan, there are no mileage limits. So if you like to take road trips or you have a long commute, think about a loan.

2. Keeping a car spotless is a challenge for you.
If you have a coffee spill or a fender bender in a leased car, you could give the vehicle back to the leasing company at the end of the agreement and receive a bill for the damages. For example, one leasing company charges for any stains greater than half an inch. Avoid a wear-and-tear charge by taking out a loan.

3. Your credit is improving, but it's not perfect.
Perfect credit is certainly something to strive for, but according to Fair Isaac (creators of the FICO score), 87% of the American public has less than an 800 credit score. If you find yourself somewhere in that majority, it's comforting to know that loans typically offer much more credit flexibility than leases.

4. Having the title and keeping the car for a while have value to you.
Different people have different definitions of what it means to "own" a car. Some like getting a new one every few years. Some prefer to drive the same one for a decade. If your definition of ownership includes getting the title and driving the car for as long as you'd like, lean toward a loan.

5. You want to customize your car.
Leases don't allow you to make any modifications to your car. If you want to add a brush guard to your SUV, running boards to your minivan or a spoiler to your sports car, think about a loan. You can customize and accessorize all you want.