Should You Get a 72 Month Car Loan?

Jacoba Bood
Apr 27, 2022 · 7 min read
You can take out a 72 month car loan, but it’s best to avoid loans over 60 months whenever possible. 72 month loans often come with high-interest rates that can leave you owing more than your car is worth.
If you’re buying a car and looking for information about what kind of loan is best, you’re in luck. Car insurance comparison shopping app Jerry has put together everything you need to know about 72 month car loans—plus some alternatives (like getting cheap car insurance to help make your monthly budget more manageable).
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4 reasons to avoid 72 month loans

The low monthly payments that often come with 72 month loans might seem appealing, but it’s always best to avoid car loans over 60 months if you can afford it. Here’s why:

1. Ending up upside down

When you take out a 72 month loan or longer, you’re highly likely to end up upside down on your loan. You are considered upside down (or underwater) when you owe more than your car is worth.
Since the value of new cars depreciates quickly, it’s not uncommon for borrowers to spend some time underwater on their loan—especially off the start. But with a longer loan term, you’re far more likely to stay upside down longer.
Suffice it to say that it’s best to avoid this unpleasant scenario whenever possible. Being upside down on a loan can make it difficult for you to sell your car or refinance.

2. Stuck with negative equity

If you end up having to trade the car before the loan is paid off, you might have to deal with negative equity. You could also end up owing your lender money if your vehicle is totaled.
Let’s look at a quick example. If your car is worth $15,000 but you owe $18,000 on your loan when you get into an accident, a regular insurance policy won't cover you for what's on the car loan—just the value of the car. You will owe the lender $3,000 in negative equity. Negative equity can quickly spiral out of control if you take out a new loan with the negative equity added on top.
If you do end up upside down on your loan, a gap insurance policy can help make up the difference. If your car is totaled and you have gap coverage, your insurance company will pay your lender for any negative equity you owe on your car loan up to your policy limit.

3. Interest rates increase

Most 72 month loans come with higher interest rates than loans that are 60 months or less. And this is already on top of the longer loan term. Not only will it take longer to pay your car off, but you will pay more interest in the long run.
Rather than agree to pay more, why not free up money in your monthly budget by shopping around for better insurance rates?
Jerry is an intuitive app that makes it easy to find the best policy at the best price. Once you download Jerry, just answer a handful of questions that will take you roughly 45 seconds to complete, and you’ll immediately get car insurance quotes for coverage similar to your current plan.
Jerry customers save an average of $879 a year. Oh, and we should mention—Jerry's car insurance quotes and comparison shopping are free.

4. Potential car repairs

Once your warranty coverage expires, you could end up shelling out for repairs in addition to having to keep up with your payments. A 72-month-old car is hardly new anymore. By the time your loan is paid off, you might already be paying for repairs out of pocket.
Key Takeaway The downsides of a 72 month car loan can easily outweigh an appealing monthly payment schedule.

Alternatives to getting a 72 month loan

Even if you’re on a tight budget, it’s possible to avoid the less-than-favorable terms that come with 72 month car loans. Here are some alternative solutions to traditional 72 month loans.

Choose a low APR loan

The lower the APR that you can get on your loan, the better. A lower interest rate may not make a big dent in your monthly payments, but it can save you big money in the long run.
Generally speaking, longer-term loans typically come with higher APR rates—but this may not always be the case. Even if you can’t afford a shorter loan term, opting for the loan with the lowest interest rate will help you avoid ending up upside down on your loan.

Consider refinancing your loan

If you do agree to a 72 month loan, you might be able to refinance it for better loan terms later down the line. When you refinance your loan, a lender will pay off your old loan and give you a new loan under new terms.
It will be easier to refinance your loan for more favorable terms if you have good credit. If you have bad credit, you might not get a better deal on your new loan and could end up paying extra fees to refinance.

Lease instead of buy

If you want to get behind the wheel of a car that is a stretch to afford, you might want to lease rather than buy. A lease is basically an extended rental contract. While you won’t own the car when the lease is finished, you will have the option to buy it after.
Monthly lease payments are almost always lower than monthly loan payments, so leasing can be a good short-term option if you’re low on cash.

Put down a big down payment

If you need to take out a longer-term loan, shoot to put down at least 20% for your down payment.
Saving for a down payment might seem like a pain, but if you put down a large enough down payment, you’re less likely to end up upside down on your loan. Likewise, the more favorable your loan term, the more value you will get out of your down payment.

Save on your insurance

Paying less for your car insurance can help you save the money you need to afford a shorter-term loan. Unfortunately, filling out car insurance forms online is no fun, so people often end up paying a lot more for their car insurance than they have to.
Key Takeaway Afford a shorter loan term by choosing a low APR loan, refinancing for better terms, leasing instead of buying, putting down a down payment of at least 20%, and freeing up cash by saving on insurance costs.
If you’re shopping for car insurance, use the insurance shopping app Jerry.
Jerry will generate competitive quotes from top providers in less than a minute. As a licensed broker that offers end-to-end support, Jerry also helps you switch plans and even cancels your old policy for you.
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Is a 72 month car loan bad?

Generally, yes, a 72 month car loan is bad. When you get a 72 month car loan, you're more likely to go upside down on your car loan, which leaves you in a vulnerable financial position.
Avoid getting a 72 month car loan if you can. This might mean getting a cheaper car than you hoped for.

How long is 72 months?

72 months is equal to 6 years. Hopefully, this puts a 72 month car loan in perspective. You will have to make regular payments for the next six years of your life if you opt for a 72 month car loan, all with higher interest rates.
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