Pros and Cons of 72 month auto loans.


Defined Tag: Auto Loans.

Up until a few years ago the most common term loan period was 36 months but things have really changed since then. Certainly by the 1990's it was quite common for people who were purchasing a car for a large sum of money would take out a loan over 60 months rather than the usual 36 months. But things have advanced even further than this today and a majority of lenders are now willing to offer their customers 72 month auto loans.

However there are many advantages and disadvantages to be had from taking out an auto loan over 72 months rather than the regular 36 months.

The really big advantage to be able to have an auto loan that is over a period of 72 months is that it provides you with the opportunity to buy a much better car and also fit the monthly payments much more easily and painlessly into their budget plans. In fact more and more dealers are now offering extended loan periods and certainly more and more buyers are using these extended periods as a way of buying the car of their dreams.

But unfortunately there do seem to be more disadvantages to taking out a 72 month auto loan.  For starters whilst your payments may be lower using this type of loan the number of payments that you will end up paying is larger. Also almost all of these longer term loans will carry a much higher interest rate on them compared to the usual rates provided for shorter term auto loans. Normally a loan that is carried over a 36 to 48 month period will have an interest rate of about 6% whilst those that are over 60 months will normally have an interest rate of 7%. You may well find yourself paying thousands of dollars more for your car in interest payments than you would normally expect to. Also because you have a higher interest rate this means that less of the payment will be applied to the principle of the loan each month.

So when considering the option of purchasing your new car using 72 month auto loans you need to be prepared. By knowing about any additional costs that you will incur will help you to make a more informed decision as to whether this type of loan is the right one for you.