(NC) Long-term auto loans offer an affordable entry to the car market, but that may mean a bumpy road ahead if you use one to buy more car than you can afford.

Canada's car finance market has nearly doubled in size since 2008. This increase is in large part due to the rise in long-term loans with repayment terms of 72, 84 and 96 months; or six to eight years. This compares to roughly 60 months or five years in more traditional loans.

The longer the term, the lower the payments. But while longer terms can help you manage monthly costs, you will pay more interest by the time you clear the debt.

Too often, consumers and car dealers focus on monthly payments and not on the overall cost, including interest, insurance and maintenance over the life of the loan. By stretching and reducing payments, long-term loans may encourage you to buy a car you otherwise could not afford, exposing you to more financial risk.

“Be careful about getting overextended,” advises Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada. “Let's say you have a seven-year loan and, like many, you want to trade in your car after four years. You will still have three years of payments left. After the trade-in — and if your lender agrees — you can add what's left of that debt into a new loan for another car. That means a bigger debt, possibly at a higher interest rate, and that can put you on a dangerous debt treadmill.”

If you don't want to keep paying for a car you're no longer driving, be sure you understand the implications of a long-term car loan before you sign on the dotted line.

Long-term loans are especially costly if you have a poor credit score or no credit history, both of which may mean you'll pay higher interest rates.

Consumer advocates believe that long-term car loans render us more vulnerable to unforeseen shocks, such as a serious illness, job loss or an accident in which the car is a write-off years before the loan is paid.

Check out the FCAC's budget calculator online to help plan your next car purchase at Canada.ca.

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