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10 Reasons to Say No to 72- and 84-Month Auto Loans

Christine Spencer

Auto Loan Expert

Getting a new car is exciting, and if you've had your eye on a particular model for a long time you may be really ready to buy it and show it off to friends and family. But once you start looking at the total cost and the payments, it may start to seem unaffordable. That's when the salesperson might suggest a 72-month or 84-month auto loan, so your payments will be better. While that can sound like a great deal, you really should say no to these kinds of auto loans. Here's why.


1. You're Already “Underwater” From the Beginning

When you drive the car off the lot, you're going to owe more on it than it's worth. That's because of the fees, taxes, interest, and everything that goes into getting a long car loan without putting money down. If you would need to sell the car in the near future, you won't be able to get what you owe, and if the car is wrecked and totaled the insurance may not even pay off your loan.

2. Don't Get Stuck in a Cycle of Negative Equity

Having a 72- or 84-month car loan means you'll owe more than the car is worth for a very long time. If you want to trade the car in on another one before the loan term is up, you'll have to roll your negative equity in the first car into the new loan. While that can't always be done and you may not be able to trade cars at all, when you find a dealer who will help you then you will owe more than the actual value on the new car, too. It can become a hard cycle to get out of.

3. You Could Pay Thousands of Dollars More in Interest

Even if the payment seems good, you really want to check into how much interest you'll pay over the life of the loan. An extra year or two on a car loan can mean a lot of interest, and that money could have been used for something else instead. While there are times when paying a little more interest on something might be worth it, most of the time the goal should be to keep the amount of interest paid as low as possible.

4. Car Models Can Go Out of Style Quickly

Eighty-four months is a long time to pay on a car. A lot of people don't even keep their car that long, and by the time it's paid off you probably won't care for it anymore. Styles change, and having an older car could make you feel out of place and uncomfortable depending on where you live, what job you have, and what other people in your local area and neighborhood typically drive.

5. Stretching Out the Loan Means a Higher Interest Rate

Not only will you pay more interest over the life of the loan simply because it's a longer term, but you'll also pay interest at a higher rate. Once you get beyond 60 months on a car loan, it's higher risk for the bank or lending institution so they're going to charge you a higher rate. That can mean your payment isn't really that much lower than it would be with a 60-month loan.

6. With a Loan That Long, the Car Really Isn't Affordable to You

If you need to finance a car for more than 60 months, it's likely not really affordable. By choosing something in your budget you'll be financially safer and more stable, and you won't have as much risk of ending up in a position where you can't pay for your car. Saving up and having a bigger down payment, or just paying for a car that's less expensive, can be a much better choice.

7. Your Tastes and Needs Will Likely Change in That Length of Time

During the 72- or 84-month term, what you like and what you need in a vehicle may really change. You could get married, have a child, move to another city, make a lot of new friends, or almost anything else. If the car you bought doesn't work for you with those changes, selling it will be difficult because of the negative equity and the amount you owe.

8. The Warranty Isn't Going to Last You 84 Months (or Even 72)

Car warranties aren't as long as they used to be in most cases. Some makers, like Kia, offer 10-year, 100,000 mile warranties on some parts, but most car makers stay with three years or 36,000 miles unless you want to buy an extended warranty, as well. You can get longer warranties but they can be expensive, which can raise the price of the car's monthly payments beyond what you want to pay or can qualify for, even with a longer-term loan.

9. Before Your Loan is Paid You'll Be Paying for Repairs, Too

Because the warranty isn't as long as your loan term, and even good warranties or extended warranties don't cover everything, you'll likely be facing some repair work even before you get your car paid off. Depending on the type of repair that could mean thousands of extra dollars going out for a car that's getting older and starting to have problems, even though you still have a payment on it.

10. Depreciation is a Real Thing

Cars depreciate, especially in their first couple of years, and that depreciation can take its toll on your car's value quickly. You will never really have equity in your car, and would be better off purchasing something more affordable or something a couple of model years old. If you buy a vehicle that's two or three years old you can get a car that has already seen most of its significant depreciation. It will hold its value better than a brand new car, and if you couple it with a bigger down payment and a shorter loan term, you can save yourself a lot of financial heartache.