What Is The Disadvantage Of A Longer 60 Or 72-Month Auto Loan?

The Disadvantages of a Longer 60 or 72-month Auto Loan

When looking to purchase a new vehicle, you want to make sure you’re getting the best possible deal. This includes getting a loan with favorable terms and conditions. One of the ways car buyers try to reduce their monthly payments is by opting for longer auto loans. However, while this can be a tempting choice, it comes with several major drawbacks. In this article, I’ll take a closer look at the disadvantages of 60 or 72-month auto loans.

The risk level for lenders increase after 60 months

When a lender offers a car loan, they take on a risk that the borrower will not repay the full amount. This is why the interest rates for car loans are higher than other loans. The longer the loan is, the riskier it becomes for the lender as the borrower may have unforeseen financial problems that could affect their ability to make the monthly payments. This is why after 60 months, the interest rates on car loans often increase.

Longer loan terms lead to higher interest rates

As mentioned earlier, longer auto loans are considered riskier for lenders, and thus, they require higher interest rates. The difference between a 48-month loan and a 72-month loan can be significant, with interest rates for the latter often being several percentage points higher. This can add up to thousands of dollars over the life of the loan, significantly increasing the total cost of financing the vehicle.

Tip: Always check the interest rates for different loan terms offered by the lender and compare them carefully to see which offers the best value.


  • Lower monthly payments
  • Easier to qualify for


  • Higher interest rates
  • Longer repayment period
  • Higher total cost of financing

Borrower’s ability to repay comes into question

With longer auto loans, the lender is taking on more risk, and they need to be sure that the borrower has the ability to repay the loan. This means that they will scrutinize the borrower’s credit history, employment status, and income more closely. If the lender has concerns about the borrower’s ability to repay, they may either decline the loan request or offer a higher interest rate.

Burden of monthly payments for an extended period

While a longer loan term means lower monthly payments, it also means that the borrower will be making payments for a more extended period. This can be a significant burden on their monthly budget, especially if they experience a financial crisis or a change in income during the loan term. Furthermore, the longer the loan term, the longer it takes for the borrower to become the owner of the vehicle free and clear.

Higher total cost of financing

As mentioned earlier, longer loan terms lead to higher interest rates that significantly increase the total cost of financing the vehicle. In fact, the difference in interest rates for a 48-month loan term and a 72-month loan term can be several thousand dollars, depending on the lender’s rates. While paying lower monthly payments may be attractive, it may not necessarily mean that the loan is a good deal in the long run.

Limited flexibility for trading-in or refinancing the vehicle

Another significant disadvantage of longer auto loans is that they limit your flexibility when it comes to trading-in or refinancing the vehicle. While many dealerships and lenders encourage car buyers to trade in their vehicles after a certain number of years, with a longer loan, the borrower may still be paying off the original loan by that time. Similarly, if the borrower wants to refinance the vehicle loan to secure a better interest rate or monthly payment, they may find that the equity they have built in their vehicle is insufficient to refinance the loan.

In conclusion, while a longer auto loan may seem like a good idea initially, it comes with many significant disadvantages. With higher interest rates, increased risk for the lender, and a longer repayment period, it could end up costing you thousands of dollars more over time. Before signing on the dotted line, it’s always essential to check the terms and conditions of the loan carefully and consider all your options before making a final decision.

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