Getting a 72 Month Used Car Loan Without Getting Burned

A 72 month used car loan offers advantages that help many borrowers qualify for a car they might not otherwise be able to afford, and low monthly payments are chief among those benefits. However, there are downsides as well, and you should take them into account when considering financing your used car with this type of loan.

Know What You Can Afford

New or used car buyers often fall into the trap of falling in love with one particular car. If it is too expensive for a more traditional three- to five-year loan, which would be 36 to 60 months, buyers will consider a longer 72-month used car loan to get that car.

The longer loan period usually means a lower monthly payment and makes the car more affordable.

It is more prudent to determine what you can afford and then choose the best vichle in that price range. A good rule of thumb is this: Half of what you make each month should be equal to your housing cost (rent or mortgage, plus insurance and taxes) and your car payment. Beyond that range, you are borrowing trouble, as the saying goes, possibly locking yourself into a long-term loan that will strain your resources.

Know the Car You Want


Selecting the right car to finance with a 72 month used car loan is as important as borrowing what you can afford. The average driver buys a different car every three to five years. A 72 month used car loans means you are planning on keeping your car for six years at a minimum.

Keep the following in mind:

  • Length of Warranty--Even extended warranties on used cars will not last six years. That means as the car ages--and needs more work--those costs will fall on you. Keep that in mind when choosing a car or a monthly payment.
  • Reliability of the Car--With a six-year loan, you are counting on driving your used car at least 100,000 miles. (If you buy a one-year-old car, it will be seven years old at the end of your loan with an average of 15,000 per year.) Choose a car that ranks high for reliability.
  • Resale of the Car--A car loses value with every year you drive it, and you are planning on keeping it at least six years. If you need or want out of the loan before you have paid it off, it is quite possible that its value will be less than what you owe. This is called being "upside down" in a loan, when you owe more than the car is worth. A used car with high resale value can help.

Compare Borrowing Alternatives

A 72 month used car loan should not be your first choice. You will pay a higher interest rate for this long-term loan than you would for a three- or five-year loan. This is because the longer loan term means there is a longer time period for which the lender is at risk for having loaned you the money. Interest rates are always pegged to the amount of risk the lender must face.

Even though your monthly payments are lower with the 72 month used car loan, the total you pay will be much higher because the interest rate is higher and you are paying it for a longer period of time.

Consider getting less car for a shorter period of time or waiting until your finances justify a borrowing alternative such as shorter-term loan.

Prepare for the Long Haul

When considering a 72 month used car loan, you need to prepare to stick with it for the long haul. As mentioned above, the chances are good you will be upside down in the final years of the loan. That means if you trade the car in or try to sell it, you will actually receive less for the car than you owe. Unless you have cash on hand or find a lender to extend a loan that includes the balance on your 72 month used car loan, you might be stuck.

Consider Refinancing

Six years is a long time, and your financial situation could improve during it. If it does, consider refinancing your 72 month used car loan into a shorter note. If there are higher monthly payments and you can afford them, you may come out ahead. That is, if refinancing changes a six-year loan into a four-year loan, you likely will pay less in total dollars and you will have a loan paid off on a car that has higher value.


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