Are 72 Month or 84 Month Auto Loans a Bad Idea?

If you’re in the market for a new car, a 72- or 84-month loan might be more tempting than a traditional 36- or 60-month auto loan. But are these longer-term loans a wise choice? The answer is a bit complicated. 

A longer loan term will likely result in lower monthly payments, but you’ll also likely pay higher interest costs over time. If you’re wondering, “Are 72- or 84-month auto loans a bad idea?” here’s what to know before applying.

Are 72-month auto loans a bad idea? 

Longer-term loans, including 72-month auto loans, have some benefits and drawbacks.If stretching your term from three or five years to six years enables you to buy a reliable car you’ll keep for several years, it could be a good decision. Your monthly payments will be lower, which could make your car more affordable. 

That said, your cumulative interest costs will be higher, as longer-term loans often carry higher rates, and you’ll pay interest longer. And if you make a small down payment, you’ll also be more at risk of being underwater on your car loan because you’re paying it down more slowly over a longer time period. 

Opting for a shorter term is likely the better choice if your payments are manageable, as it could help reduce your interest costs over time. It could also help prevent you from being underwater on your car loan and running into financial trouble if you plan to sell or trade in your car in a few years. 

Remember that cars depreciate fast, and you’re likely to get market value for your car when you sell it or trade it in, assuming it’s in good condition. If your loan balance exceeds your car’s market value, you might need to pay a hefty difference to your original lender. This is called negative equity, and it could stretch you financially, especially if you plan to buy another car. 

Payments on a 72-month auto loan

Suppose you purchase a $35,000 used car from a reputable local dealership and make a $10,000 down payment. Your new-to-you vehicle has less than 25,000 miles, and you have excellent credit and can access the lowest rates. 

Here’s a look at your monthly payments with a 5-year vs. 6-year auto loan. For the purposes of our example, we assume the 6-year loan has a slightly higher rate, as this is often the case when you opt for a longer term. 

Term	Rate	Monthly payment
60 months	7.00%	$495.03
72 months	7.25%	$429.23

While your monthly payment with a 60-month term will be higher, your overall loan costs will be lower. You’ll pay $4,702 in interest over five years versus $5,905 in interest over six years. So you’ll keep more money in your pocket upfront with a longer-term loan, but your total costs over time will be $1,203 more than if you opted for a shorter-term loan.

Are 84-month auto loans a bad idea? 

Again, your monthly payments on an 84-month loan will be lower, which could tempt you to seek out a longer term if you’re concerned a car payment will stretch your budget. But in general, an 84-month loan is only a good choice if it enables you to buy a reliable car that you’re 100% certain you’ll keep for at least seven years. Otherwise, you’re likely better off with a shorter-term loan. 

Opting for an 84-month loan carries similar risks to opting for a 72-month loan, though your total loan costs and the chance you’ll have negative equity increase even further. You’ll pay significantly more in interest costs over the life of your loan, and selling or trading in your vehicle might be more expensive than it would be with a shorter-term car loan. 

You could also have higher maintenance and repair costs because your car will be relatively old when you’ve paid it off. For instance, if you get an 84-month loan to purchase a 4-year-old car, your vehicle will be 11 years old before your loan is repaid. And if you drive around 13,500 miles per year on the road, your car could have over 148,000 miles before your loan is paid off. 

Lastly, finding an 84-month car loan with a favorable rate might be difficult. Not many lenders offer 84-month auto loan terms, and because a longer term could come with more risks—including an increased chance of negative equity—your rates will likely be higher. 

Payments on an 84-month auto loan

Here’s an example of potential costs on an 84- versus a 60-month car loan. For the purposes of our example, we’ll assume you bought a $35,000 used car from a reputable local dealership, and your down payment was $10,000. Your new-to-you car has less than 25,000 miles, and you have excellent credit and can access the lowest rates. 

Term	Rate	Monthly payment
60 months	7.00%	$495.03
84 months	7.75%	$386.55

While a difference of nearly $100 between the monthly payment amounts might seem significant, that doesn’t account for interest costs over time. When you factor interest costs in, you’ll pay $4,702 in interest with a 60-month term and $7,470 in interest with an 84-month term. That’s a difference of $2,678, which isn’t a small sum.  

How to get a shorter loan term

If you’re stuck with a 72- or 84-month loan and it isn’t right for you, there are a couple of things you can do to secure a shorter term:

• Pay your loan off faster. Start by reading your original auto loan contract to determine if there are any penalties associated with your loan, such as early termination fees. If there aren’t, you could make larger monthly payments toward your existing loan to repay it sooner. 

• Consider refinancing your existing loan with a new, shorter-term option. But this can be tricky if rates have risen since you applied for your original loan. Refinancing your auto loan may be a good choice if you qualify for a shorter-term loan with a lower rate. 

But it also depends on which, if any, fees might apply. Your original loan might have an early termination fee, and you could pay an application fee on your new loan. If the fees associated with refinancing outweigh the amount you’d save by paying extra monthly toward your original loan, the latter is likely the better option. 

When might a 72-month or 84-month auto loan make sense? 

In general, shorter-term auto loans are less expensive than longer-term ones. So, if you can qualify for a three- or five-year loan with a favorable rate, we’d recommend going that route instead. (See our examples of total interest costs above!) 

Shorter-term loans are also more accessible than their longer-term counterparts, as 36- or 60-month auto loans are fairly standard. You might have more trouble finding a 72- or 84-month auto loan, and fewer loan options could mean you need to opt for a higher rate. 

Still, there are some scenarios in which a longer-term loan could make sense. Here’s a look at when opting for a shorter term vs. a longer one would be a wise choice. 

If…	Consider a 72- or 84-month term?
It enables you to buy a reliable car	✅
If you can afford a higher monthly payment	❌
If you can’t afford a higher monthly payment	✅
You’re seeking the lowest possible rate	❌
You’re not concerned about a higher rate	✅
You plan to sell or trade in your car in a few years	❌
You plan to keep your car for many years and aren’t concerned about added interest or repair costs	✅