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Is 72 month car loan bad?

Looking into buying or refinancing a car and wondering: 'is getting a 72 month car loan bad?'

Nicholas Hinrichsen - Published: August 1, 2020

In short - no, but it all depends on your financial goals. The normal loan length for a car in the USA right now is a little over 70 months. Loan terms have been longer and longer each year which worries some financial analysts but remember that:

  • Cars are more reliable and longer lasting now than ever
  • Interest rates are at their lowest amounts in decades, and so total interest expense is lower than ever
  • Used cars have been retaining value better than historically - so you're more likely to end up with positive equity

That said - it all depends on your financial goals. I would not recommend a 72 month term if

  • You are paying a high interest rate (greater than 7%). With a high rate it takes MUCH longer to get to positive equity. With a high rate and a long term, each of your loan payments early on are purely paying down interest
  • If the car is very old. Older cars tend to have more problems and less "life" left, and you may reach a point where its not worth repairing the car while you still have some loan balance left.

Its worth remembering that EVEN if you made a mistake and selected the wrong loan or wrong timespan, it is often possible to refinance.


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