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There is only one benefit to financing a car for 72 months…lower monthly payments. On the other hand, there are plenty of reasons not to.

First off, you are going to need a solid credit score in order to finance a vehicle for more than 48 months. The longer you want to finance a vehicle, the higher your credit score must be.

Negative Equity

Next there is the issue of being upside-down on your car loan for a major portion of the loan agreement. If the difference between the loan balance and the value of the vehicle is great enough, the lender may require that you carry ”gap” insurance. This can add to your financial burden quite heavily. Additionally, what if you decide to trade in this vehicle before your six-year repayment term is up? Chances are you will owe a “deficiency balance,” meaning the difference between what the car is worth in trade and what you owe on the loan. You will either owe this balance in cash, or perhaps worse, it will be rolled into your next vehicle.

Total Interest

The third, and most troublesome, issue is the amount of interest you will have to pay over the life of a 72 month loan. Here is how the interest stacks up on loans of varying lengths. These numbers assume that you finance a vehicle for $22,000 at 8 percent interest.

  • 48 months…$3,780.05 paid in interest
  • 54 months…$4,269.56
  • 60 months…$4,764.84
  • 72 months…$5,772.65

While the total interest rises dramatically, the monthly payments only drop about $150 between a 48 month loan and a 72 month loan. Yes, that is still $150, but you may still have to pay out a portion of that difference in higher insurance premiums. So, in my opinion, you should not finance a car for 72 months. Typically, 48 months is a reasonable term, and 60 months should be at the high end.


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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