The most common term currently is for 72 months, with an 84-month loan not too far behind. In fact, nearly 70% of new car loans in the first quarter of 2020 were longer than 60 months — an increase of about 29 percentage points in a decade. The trend is similar for used car loans.
Is it smart to finance a car for 72 months?
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.
What is the disadvantage of a longer 60 or 72-month auto loan?
The biggest disadvantage for a 72-month car loan would be that the interest rates are much higher for these longer loans. It may be in your best interest to keep your monthly payments low, but that does not mean you are saving money. The longer the loan, the more you will lose to interest.
How can I pay off my 72 month car loan early?
How to Pay Off Your Car Loan Early
- Pay half your monthly payment every two weeks. This may seem like a wash, but if your lender will let you do it, you should.
- Round up.
- Make one large extra payment per year.
- Make at least one large payment over the term of the loan.
- Never skip payments.
- Refinance your loan.
What is the shortest car loan?
A short auto loan length may be 36 months to one borrower, and 12 months to another. A 60-month car loan was long considered conventional, but the average new-car buyer is creeping closer to 70 months. Some banks and credit unions even offer 96-month terms.
Whats a good APR for a car?
What is a good APR for a car loan with my credit score and desired vehicle? If you have excellent credit (750 or higher), the average auto loan rates are 5.07% for a new car and 5.32% for a used car. If you have good credit (700-749), the average auto loan rates are 6.02% for a new car and 6.27% for a used car.
Why are long term auto loans a bad idea?
Any loan that exceeds the length of your car’s warranty coverage is potentially too long. It exposes you to having to make car payments and pay for costly repairs at the same time. Avoiding a long-term auto loan requires consumers to understand all the aspects of a car deal.
Is it a good idea to loan a used car?
Even though depreciation is less of an issue with used cars, since a car depreciates the most in its first few years, long-term car loans on used cars aren’t a good idea, either. A used car already has a significant number of miles on it and a longer-term car loan would mean that the car will have higher mileage when it is finally paid off.
What are the pros and cons of a 96 month auto loan?
Cons of a Long-Term Auto Loan More interest: 96-month auto loan rates might be the same as those for a shorter-term loan, but you will make interest payments for more months thus paying higher total interest. Using the same $25,000 car with 5% APR over five years, you would end up paying $3,307 in total interest.
What’s the longest you can get a car loan for?
It used to be that the longest car loan you could get was for 60 months, or five years. But now the average auto loan is for 68 months, with some lenders offering 84-month auto loans.
