72 Month Used Car Loan: Is It A Good Idea?

A 72 month used car loan is expressed by number of months and the payment per month. The average length of a car loan ranges from 36 months to 72 months. The length of your loan will affect the interest rate and how quickly you build equity. 72 months is considered a very long loan, especially for a used car. When you are seeking any type of loan, go into negotiations prepared. Determine the conditions in which a 72 month loan would make sense for you. Knowing the conditions you will accept before negotiating protects you from signing a loan that does not make financial sense.

72 Month Used Car Loan -- Pros
The main reason individuals seek low monthly used auto loans is for smaller monthly payments. Before going into negotiations, know exactly how much you can afford in car payments each month. Your monthly salary should be twice your living expense and car payment. For example, if your salary is $2,700 per month and your mortgage is $1,100 per month, you should seek a low car payment of $250 or less. Extending your loan for 6 years will ensure your monthly payments are lower than with a short loan. A second benefit is the opportunity to refinance. If your credit is poor, after 3 years of making car payments, it will be better. You may be able to use this improved credit to refinance your loan in the future at a lower rate.

72 Month Used Car Loan -- Cons
When you are purchasing a used car, you need to be more wary of the length of the loan versus the interest rate quoted. Your car will lose value swiftly in the years you drive it.  You will likely trade in the vehicle for another in the future. Trade-ins provide the majority of down payments in monthly used car loans. Ultimately, you may end up owing more than your car is worth in equity. This means you would owe money when you decide to trade in your vehicle. A second major disadvantage to a long monthly used car loan is a high interest rate. Lenders may try to entice you with the low monthly payment, but the interest rate on a long loan is always higher. The total cost of your vehicle will be much higher. If you can afford the monthly payments, it makes financial sense to opt for a shorter loan.

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