60 month vs 72 month auto loan - is longer term ever worth it?
Dealer pushing 72-month loan because lower payment. I know longer terms cost more in interest, but 60-month payment is a bit tight. Is 72 months ever the right call?
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asked 8 June 2024, 5:29 pm by Tim H.
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Not always a trap, but usually means you're buying too much car. Math: $25K at 6% for 60 months = $483/month, $3,998 interest. Same at 72 months = $414/month (looks cheaper!) but $4,849 total interest. $850 more for 'lower payment.' If budget can't handle 60-month and you'll make extra principal payments, 72-month gives flexibility. Just don't let lower payment convince you to buy a pricier car.
With 72-month loan, you'll be underwater (owe more than worth) for first 3-4 years. If car gets totaled or you need to sell, you're in trouble. Gap insurance becomes more important.