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Yes, you can finance a car for longer than 60 months. These days, 72 month loans are not at all unheard of, and some lenders are offering 84-96 month loans to customers with top credit scores. While these loans may sound great on the surface, there are many reasons why you should not finance a vehicle for that long.

Longer Financing, Negative Equity, and Total Interest

Financing a vehicle for more than 60 months practically guarantees that you will be upside-down on the loan for at least half of the time the vehicle is financed. Many lenders will then require that you carry additional insurance to cover the gap between the vehicles value and the loan balance. Being upside-down on the loan will also make it difficult to trade the vehicle in when you are ready to. The final, and perhaps most persuasive, point is the additional interest you will have to pay over the life of the loan. Look at the interest on a loan for a car that costs $22,000 when it is financed at 8 percent for varying lengths (monthly payments are included):

  • 48 months…$537.08…$3,780.05 paid in interest
  • 54 months…$486.47…$4,269.56
  • 60 months…$446.08…$4,764.84
  • 72 months…$385.73…$5,77265
  • 84 months…$342.90…$6,803.32
  • 96 months…$311.01…$7,856.67

As you can see, the amount of interest jumps dramatically each additional year a car is financed, but the monthly payment only dips an average of around $40. So, while it is possible to finance a car for longer than 60 months, it may not be the best decision in the long run.

What to Ask Yourself

If you are tempted to finance a car for 60+ months, be sure that you:

  • Can offer 20% down.  This will protect against, if not prevent, being upside down.
  • Do not plan to trade in the vehicle prior to it being paid off.  The remaining balance from your old loan will be rolled into your new one, placing you under a crushing weight of negative equity.
  • Expect your income to rise over the next five years. This will help compensate for the more frequent repairs and maintenance that your vehicle will need as it gets older and accrues mileage.

On average, American consumers now finance their vehicles for slightly longer than five years. However, this does not mean that it’s the right decision for you. Do the math, ask yourself these questions, and proceed with caution.


About the author: Jerry Coffey


Jerry Coffey is the financial expert here at A recovered "debtaholic," he now preaches frugal-living and sound money management here and at, where he is the chief contributor. He works for a major automaker.


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