Is it smart to do a 72 month car loan?

Is a 72-month car loan worth it? Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go.


Is 72-month car loan a good idea?

A 72-month car loan can make sense in some cases, but it typically only applies if you have good credit. When you have bad credit, a 72-month auto loan can sound appealing due to the lower monthly payment, but, in reality, you're probably going to pay more than you bargained for.

What are the pros and cons of a 72-month auto loan?

Here are the financial pros and cons of taking on a 72-month car loan or an 84-month car note.
  • Pro: Getting lower monthly payments. ...
  • Pro: Achieving greater financial flexibility. ...
  • Con: Paying additional interest. ...
  • Con: Having negative equity or being “upside down” in the car loan. ...
  • Con: Buying more car than you can afford.


What is the best car loan length?

According to most personal finance experts, the optimal length for a car loan is 48 months, although some are upping this length to 60 months due to the increased cost of vehicles and lower interest rates.

How common is a 72-month car loan?

Experian reveals that 42.1% of used-car shoppers are taking 61- to 72-month loans, while 23% go even longer, financing between 73 and 84 months. If you bought a 3-year-old car and took out an 84-month loan, it would be 10 years old when the loan was finally paid off.


Is it smart to do a 72-month car loan?



What APR is too high for a car?

A high APR (“annual percentage rate”) car loan is one that charges higher-than-average interest rates. The legal limit for car loans is around 16% APR, but you will find lenders that get away with charging rates of 25% or more.

Is it smart to finance a car for 6 years?

Many experts recommend a five-year loan or less if you can make it work. While a longer term might get you a lower monthly payment, your cost to own the vehicle will likely be higher based on interest paid over a longer length of time.

What is the downside of a longer car loan?

You'll Pay More Interest

Long-term car loans typically carry higher interest rates than shorter-term loans. And even if you can find a long-term loan with a low interest rate, making payments for seven or eight years will likely add up to more interest over time compared with a shorter-term loan.


Is it better to finance a car longer or shorter?

Typically, the shorter the car loan, the better the interest rate the lender will offer—this is because shorter loans tend to have a lower risk of default by the borrower.

Should I do a 3 or 4 year car loan?

A longer loan term could mean making payments for five to seven years. A shorter, three-year term will put you in full possession of your car much sooner, which means you'll get the money back in your monthly budget and can use it to pay down higher-interest debts or save.

Why not finance a car 72 months?

Is a 72-month car loan worth it? Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go.


Can you finance a 5 year old car for 72 months?

A lender sets the auto loan term length for a used car, which varies from company to company. Until recently, used car loans were generally limited to 72 months. However, today borrowers can secure used car loans for 84 months or more due to the rising need for vehicles.

Is 7 years too long for a car loan?

An 84-month auto loan can mean lower monthly payments than you'd get with a shorter-term loan. But having as long as seven years to pay off your car isn't necessarily a good idea. You can find a number of lenders that offer auto loans over an 84-month period — and some for even longer.

Why should you not finance a car for more than 4 years?

A longer loan term means you are more likely to be upside down on the loan at some point in the future. Being upside on an auto loan means you owe more than the car is worth. This is because a larger portion of the monthly payments early in the loan will go toward paying interest rather than the principal owed.


What is a decent monthly car payment?

The average monthly car loan payment in the U.S. is $700 for new vehicles and $525 for used ones originated in the third quarter of 2022, according to credit reporting agency Experian.

What is the most common car loan length?

What is the Average Car Loan Length? The most common loan length is currently 72 months for both new and used vehicles. The average length of a car loan changes from time to time, and 72 months is a bit higher than in previous decades.

What is the smartest way to finance a car?

How to finance a car the smart way
  1. Check your credit score before you go to the dealership. ...
  2. If your credit score isn't perfect, get financing quotes before you go. ...
  3. Keep the term as short as you can afford. ...
  4. Put 20% down. ...
  5. Pay for sales tax, fees, and “extras” with cash. ...
  6. Don't fall for the gap insurance speech.


Is it better to finance at a dealership or bank?

Dealerships with in-house financing may offer lower interest rates than banks or credit unions. Because dealerships specialize in lending to car buyers, in-house financing could save you money. Dealership financing may be the best option for buyers with bad credit.

Is it cheaper to pay off car finance early?

Paying off your car finance early can save you money on interest, but it won't always be the best decision. It could be worth paying off your finance early if: Paying the settlement figure to clear your finance is cheaper than continuing with your repayments.

Does the length of a car loan affect credit score?

The good news is that only revolving credit accounts, such as credit cards, impact credit utilization, which accounts for 30% of your credit score. Loans, including auto loans, are not calculated into credit utilization and, therefore, will not impact this scoring factor.


Is 7 percent interest high for a car?

“Depending on the loan term, 7% APR on a used car loan isn't all that bad. Because a car that's over 10 years old is considered high-risk, you're unlikely to find a much lower rate. Even so, you should shop around to ensure you're still getting the. If the current offer is the best one, try to avoid a long-term loan.

How long should you keep a car financially?

As someone who values your life and the life of your passengers, you should probably get a new car every 8-10 years. It's as logical as getting life insurance at around age 30. After 10 years, you will likely be much wealthier as well.

How many months of car payments to improve credit?

While many factors come into play when calculating your FICO credit score, you may start to see your auto loan raise your credit score in as few as 60 to 120 days. But remember, everyone's credit situation is different, so your results may vary.


Is buying a 5 year car worth it?

Buying a five–year–old car may be an even better option. You won't get the latest features, but it won't lose so much in value. And you won't be shelling out so much each month on interest to repay a loan. But it's only better value if your mileage is low – under 10,000 miles a year.

What month is best to buy a car?

End of the year, month and model year

In terms of the best time of the year, October, November and December are safe bets. Car dealerships have sales quotas, which typically break down into yearly, quarterly and monthly sales goals. All three goals begin to come together late in the year.