Is 72-month car loan OK?

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 a 72 month car loan good?

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.

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.

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

What is the best length for a car loan?

This is why Edmunds recommends a 60-month auto loan if you can manage it. A longer loan may have a more palatable monthly payment, but it comes with a number of drawbacks, as we'll discuss later. The trend is actually worse for used car loans, where just over 80% of used car loan terms were over 60 months.

ARE 72-84 MONTH AUTO LOANS A BAD IDEA??

What is considered a high car payment?

According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn't your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.

What is the downside of a longer car loan?

Disadvantages of a 96-Month Car Loan

This makes these loans more risky for lenders, prompting them to charge higher interest rates. You'll also be accruing interest for a longer time, so the total cost after eight years can be substantially higher than that of a shorter-term loan.

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.

Is it smart to get a 7 year 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.

Can you finance a 6 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 it OK to finance a car for 7 years?

The longer your loan term — typically ranging from 24 to 84 months, or two to seven years — the cheaper your monthly payments will be. But remember, a lower monthly payment has drawbacks, including potentially costing you more over the long term. For most drivers, a long-term car loan is not a good idea.

Can you finance a 7 year old car for 72 months?

Typically, a bank won't finance any vehicle older than 10 years, even if you have good credit.

Is 5 years too long for a car loan?

For a long time, three- or five-year car loans were the norm. But more and more people are choosing longer-term auto loans. In the fourth quarter of 2021, the average loan term for new-car loans was nearly 70 months, according to the Q4 2021 Experian State of the Automotive Finance Market report.

What is a good APR for 72 months?

The average interest rate for a 72-month new car loan is about 5.4% and 9.2% for a used car loan.

How can I pay off my 72 month car loan faster?

How much is a 40k car payment?

If you take a car loan of $40000 at an interest rate of 4.12% for a loan term of 72 months, then using an auto loan calculator, you can find that your monthly payment should be $628. When the loan term changes to 60 months, the monthly payment on a $40000 car loan will be $738.83.

What is the 20 4 10 car rule?

Basically, the rule goes that you provide a down payment of 20% of the balance, sign a loan for a four-year period, and pay no more than 10% of your monthly income on car expenses. These expenses include any money you put towards your new vehicle, including gas, insurance, and loan payments.

How to pay off a 7 year car loan early?

What is the monthly payment on a $30 000 car loan?

The monthly car payments on a $30K car loan range from $492.24 to $819.03. Payments vary based on your credit score, and the sales tax rate of your state, and whether you are financing a new or a used car.

Is buying a 5 year car worth it?

After one year, your car will probably be worth about 20% less than what you bought it for. AFTER FIVE YEARS: After that steep first-year dip, that new car will depreciate by 15–25% every year until it hits the five-year mark. So, after five years, that new car will lose around 60% of its value.

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

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.

Why you shouldn't pay off your car loan early?

You may not want to pay off your car loan early if it's going to put you in a precarious financial situation. Depleting your savings account or making larger monthly payments than you can afford may help you pay off this particular debt faster, but it could make it difficult to cover surprise expenses later.

What is the disadvantage of a longer 60 or 72 month auto loan?

Cons: Higher interest rates: After 60 months, interest rates for auto loans typically jump because the “risk” level for lenders increases. As previously stated, the longer the loan, the more that lenders worry that the borrower won't pay them back in full.

Is it better to have a short or long car loan?

While both long term and short terms auto loans offer advantages, short term loans are still generally better for borrowers. In terms of the overall cost of the vehicle, short term loans are way cheaper and a smarter choice because of the lower interest rates.

How much should I spend on a car if I make $60000?

Follow the 35% rule. Whether you're paying cash, leasing, or financing a car, your upper spending limit really shouldn't be a penny more than 35% of your gross annual income. That means if you make $36,000 a year, the car price shouldn't exceed $12,600. Make $60,000, and the car price should fall below $21,000.