Car loans come in many forms and when you’re looking for a new vehicle to finance, there are a lot of factors to consider. Interest rates, fees, and term lengths help determine not only how much you’ll pay for your new car, but also how long you’ll be on the hook for it. So, when it comes to financing with a car loan, how long is too long? Today’s loan terms are longer than ever, with 72-month and 84-month car loans growing more and more popular. But why would anyone want to pay for a car for 72 months?

A 72-month car loan: how many years will you be paying for?

Car dealers often present a variety of loan-lengths to potential shoppers, varying from 24, 48, 60, 72, and 84 months. When buyers are presented with these types of terms, a 72-month car loan doesn’t seem like that long when you’re getting a new car. But 72 months equals six total years. And six years is a long time to pay for a car.

As if six years isn’t long enough, buyers who opt for an 84-month loan get stuck with payments for seven years. Although six or seven years is an awfully long time to still be making payments on your vehicle, more buyers are choosing these extensive loan terms. Why?

The rise of extensive car loans: why more buyers are drawn to 72-month loans

Buyers are often drawn into a 72-month, or even 84-month, loan for a variety of reasons. A longer loan term means longer to pay it off and therefore, lower monthly payments. Lower monthly payments can be tempting to those working with a monthly budget. This isn’t just appealing for the lower monthly payments either, but it also benefits buyers with costlier preferences as well. Buyers are able to choose vehicles they may not normally be able to afford, because the cost is stretched over more time. And buyers are spending more than ever on new cars.

According to Edmunds, the automobile industry has experienced a “gradual rise in new vehicle prices” in recent years, which only exacerbates the current trend of buyers preferring costlier vehicles. Recent data finds that the average car payment is higher than ever, with people needing to cope with rising prices.

Today’s buyers have big expectations for new vehicles, and most are willing to pay for it. In order to deal with the reality of higher prices, many people choose a longer loan term. In fact, the average loan term for today’s buyers has also hit record highs, with almost 70 percent of new car loan terms in the first quarter of 2020 longer than 60 months. That is a nearly 30 percent increase in just 10 years. 

If you need 72 months to pay off a car, maybe you should reconsider

Just because a longer-term car loan is available, however, doesn’t mean it’s the best idea for most shoppers. While it may be harder than ever for strict budgeters to find a good deal, car loans with terms longer than 60 months could really wind up costing you more in the end. According to Cars.com, “lengthier car loans require banks to take on more risk, so interest rates are typically higher” with long-term loans. This means that although buyers may have lower monthly payment amounts with longer loan terms, the final cost (with interest) for the vehicle is higher than with shorter loan terms.

This doesn’t even take into account other factors, like whether the shopper is upside-down on a previous vehicle or the general depreciation of a vehicle. After six or seven years, your vehicle’s warranty is guaranteed to have expired. This means more money must be spent on repairs and maintenance. And according to U.S. News experts, new vehicles can lose up to 20 percent of its value just by the end of its first year on the road. Many buyers with 72-month or 84-month car loans run the risk of making monthly payments for a bad vehicle. 

For most shoppers, it’s important to consider the long-term investment. In most cases, if you cannot comfortably afford the monthly payments on a car loan 60 months or less, you should consider another choice.