This is the new question to add to a long list of questions that the car shopper has to ask themselves. Is a 72 month car loan right for me? The answer depends on a number of factors. Here are a five things to think about:
1. How long do you plan to keep the car?
2. Are you good at maintaining your cars?
3. Do you plan to buy an extended warranty?
4. Are you getting a super low or zero interest rate auto loan?
5. Does extending the loan really get you the maximum payment you can afford?
If you plan to keep your car for a long time, then this could work for you? If you plan to keep your car for 10 years, then this gets very easy. However, that comes at a cost… very often the longer the loan term the higher the interest rate. The bank is taking on a greater risk that you will pay and pay on-time over an extended period of time. The risk for the bank steepens on a car or truck as these are depreciating assets unlike longer term loans associated with home loans.
If you are going to keep the car longer and carry a longer car note, then you will need to stay on top of your routine car maintenance. This means oil changes, tire rotations, transmission fluid, tires, batteries, and tune-ups. Over the course of 6 years of car payments, it’s likely that you will have to make both car payments and pay for car repairs. This is one reason why an extended warranty may be a good idea if you are going to carry a 72-month car loan.
Today auto manufacturers are offering lots of great financing deals. If you have a good credit score you could qualify for one of those 0% interest 72-month loans. This is a super hot deal if you can find it on the car you’re looking to buy. Visit our top-11 deal list for some examples of great deals. We highly recommend that you check the rebates and financing specials in the market before you go to the car dealership.
The final question is… does the extended loan put you in a situation that allows you to get into the car you want and can afford. Affordability is important to most car shoppers and we often stretch as far as we can to get the car we want. The financial experts suggest that you spend between 10% to 12% of your monthly income on your auto loan. You should know that the longer the loan (in most cases) the more you will pay in interest and the more you will ultimately pay for the car.
As always our advice is to try to save money on all angles of car shopping… auto loan rates, car insurance rates, extended warranty, and improved credit score to improve your financing options.