Are 72 month car loans bad? (2024)

Are 72 month car loans bad?

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 a bad idea?

72-Month Car Loan Rates Are Typically High

A high interest rate means you'll end up paying more for the total cost of the car when all is said and done and you've made all your loan payments. Paying more money in interest has no benefit, and some people consider it to be wasted money.

Is 5.9 APR good for a car 72 months?

A 72-month loan for a car is a long-term loan, and long-term loans typically come with higher interest. While long-term loans translate to lower monthly payments, they result in more interest paid over the life of the loan. With that said, an interest rate of around 5% for a 72-month auto loan is considered ideal.

What are the biggest disadvantages of financing a car for 5 years instead of 3 years?

Not all cars lose value at the same rate, but, on average, new cars lose 40 percent of their value after five years. If you decide to trade in your vehicle or sell it, you may find yourself upside down on your loan, owing more than what it's worth.

How many years is an 84-month car loan and why shouldn t you get one?

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.

Is it bad to do a 7 year car loan?

Lenders usually charge higher interest rates for long-term auto loans. Because there's more time for a borrower to default on the loan, lenders consider longer-term loans to be a higher risk. To compensate for that risk, they often charge a higher interest rate when you stretch out the loan term.

What length of car loan is best?

NerdWallet typically recommends keeping auto loans to no more than 60 months for new cars and 36 months for used cars — although that can be a challenge for some people in today's market with high car prices. Ultimately, choosing the best auto loan term depends on balancing cost, affordability and your specific needs.

How much is a $40,000 car payment for 84 months?

For example, a car buyer considering a $40,000 new car loan with an 84-month term at 9% APR would have a monthly car payment of about $623 and pay $12,369 in interest over the seven-year loan.

How much is a $40000 car payment for 72 months?

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.

How much is a $30,000 car payment for 5 years?

Provided the down payment is $5,000, the interest rate is 10%, and the loan length is five years, the monthly payment will be $531.18/month. With a $1,000 down payment and an interest rate of 20% with a five year loan, your monthly payment will be $768.32/month.

Do rich people finance expensive cars?

Overall, only 8.5% of these high rollers paid cash. Around 31% leased and 60.4% took out a loan with an average payment of $2,201 and an average term of 56 months. For comparison, the general market in 2021 saw 9% of buyers paying cash, 20% leasing, and 70% taking out a loan.

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.

When should you not finance a car?

Is it dumb to finance a car for 84 months?

For most borrowers, an 84-month auto loan may not be the best idea due to high interest rates, increased risk and vehicle depreciation. However, an 84-month auto loan can be a good idea for borrowers who need lower monthly payments.

What is a good interest rate on a 72 month car loan?

An interest rate under 5% is a great rate for a 72-month auto loan. However, the best loan offers are only available to borrowers who have the best credit scores and payment histories.

Why financing a car is a bad idea?

A car may lose 20 percent of its value in the first year. If you have a high interest rate, you could owe more than your car is worth — what's called being upside-down on your loan. Being upside-down on a car loan is a bad situation.

What are the disadvantages of a large down payment on a car?

What are the disadvantages of a large down payment? Providing more money down doesn't guarantee a lower interest rate, and it can cut into your savings.

What is a disadvantage of paying for a car with a long-term loan?

Higher interest – Vehicles purchased with long-term financing typically come with lower monthly payments but possibly a higher interest rate. Auto finance companies set interest rates based on the level of risk and consider long-term loans riskier than others.

Will car interest rates go down in 2024?

Lower Auto Loan Rates Could Make 2024 a Good Time To Buy or Refinance. While market predictions are bullish on the funds rate — and by extension, auto loan rates — finally coming back down in 2024, it's still not a guarantee. Powell and others at the Fed remain committed to their target of 2% inflation.

What is an average car payment?

Car payment statistics

The average monthly car payment for new cars is $726. The average monthly car payment for used cars is $533. 39.20 percent of vehicles financed in the third quarter of 2023 were new vehicles. 60.80 percent of vehicles financed in the third quarter of 2023 were used vehicles.

How much downpayment should I put on a car?

How much should you put down on a car? One rule of thumb for a down payment on a car is at least 20% of the car's price for new cars and 10% for used — and more if you can afford it. These common recommendations have to do with the car's depreciation and how car loans work.

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

A shorter loan term is better, as it helps minimize borrowing costs and the risk of being upside-down on your loan.

How much is a $20000 car payment over 5 years?

So, $20,000 at 5% for 36 months will cost $21,579.05 saving you $1,066.43. Using the calculator above (assuming $0 down payment, $0 trade-in and 1% sales tax) you will see that the monthly payment for the 5 year loan is $377.42 and the monthly payment for the 3 year loan is $599.42.

How much should my car payment be if I make $60000 a year?

If your take-home pay is $60,000 per year, you should pay no more than $750 per month for a car, which totals 15% of your monthly take-home pay.

How much is a $20000 car payment for 5 years?