What to Know Before Taking on a 72- or 84-Month Car Loan

to-lease-a-used-car.jpg illustration by Paul Dolan

It’s tempting to sign the dotted line on a 72-month or 84-month auto loan when you see the monthly payment plummet into a much more reasonable range. Going from 60 months to 84 months on a $35,000 car can turn a $650 car payment into a sub-$500 payment. Sweet! Right?

But should you go for 72- or 84-month auto loans? There are drawbacks to consider with long-term auto loans, even with low, or no, interest.

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Cons of 72- and 84-Month Auto Loans

Higher Overall Cost

A lower monthly payment doesn’t mean lower overall cost. Going from a 60-month loan to an 84-month loan can actually cost more because you’re paying for two more years of interest (the amount a lender charges you to borrow money; you pay the lender more money as you increase loan length). With a 5% interest rate, going from 60 months to 84 months can increase a $35,000 loan by more than $1,900. That’s the equivalent of paying almost $2,000 more for the same exact car, undoing all of that slick negotiating work on the showroom floor; plus, longer auto loans often have higher interest rates, so the cost could be even more.

You’re Upside Down More Quickly

Being upside down on an auto loan means you owe more than the car is worth. This can be problematic in a few scenarios, including with 0% interest the way many automakers recently offered as incentives during the coronavirus pandemic on 72- and 84-month auto loans. By shrinking the monthly payment, you’re paying off the overall amount more slowly than if you were paying a larger amount, meaning it takes longer to have equity in the vehicle (the car is worth more than you owe).

“One of the problems of the longer-term car loans is [that] more payments in exchange for smaller payments is a losing trade,” says Greg McBride, chief financial analyst at

According to McBride, having less equity subjects you to a deficiency balance in the event the car is totaled or stolen, and it could require you to pay your insurance company extra for gap insurance, which is a type of insurance that covers the difference between what the car is worth and how much you owe in the event of an accident when you’re upside down (financially, hopefully not physically).

84-Months Is a Long Time

A lot can change in seven years. A spunky 2-year-old toddler will be a 9-year-old know-it-all — and your car can change a lot in seven years, too, needing maintenance and repairs while you’re still paying off a loan, possibly out of warranty.

“You may be running into other maintenance costs that you haven’t in previous vehicles because this car is now older, and the risk of changing needs or tastes [increases] over an eight-year period as opposed to a five-year period. When the car breaks down, you still have to make the monthly payments even when it’s in the shop,” says McBride.

Long-term auto loans can put you in a bad spot if you get the itch or need for a new car sooner rather than later. McBride explains:

“Because these longer-term loans build equity at a much smaller pace, if you get tired of the car in four or five years, you still have three or four years to go. The depreciation is quickest in the early years, and that’s when you’re building equity at the slowest pace. It’s not just if the car is stolen or totaled, but if you get four or five years down the road and your tastes change or your needs change.”

Owing more than the car is worth, you might have to roll over the amount you owe into a new loan, increasing the cost of the new car.

Pros of Long-Term Auto Loans

Lower Monthly Payments

For those who feel comfortable taking the risks outlined above, the short answer is that auto loans with long repayment lengths can significantly lower your monthly payment. A $35,000 loan installment can go from $660 to $495 when extending a 60-month-loan to 84 months with 5% interest. With a lower monthly payment, you might be able to get into a nicer/larger/safer car than with a shorter-term loan (at the expense of potentially spending more overall money to do so, however).

0% Interest

Eliminating one concern of a long loan length is qualifying for 0% interest, an incentive that’s often popularized by automaker-backed lenders during times of economic downturn. It means you’re borrowing money for free, and it can save you big. In our $35,000 loan example, it’s the equivalent of saving more than $6,500 on an 84-month auto loan with a 5% interest rate. The catch, however, is that you may not qualify for these interest rates; typically, only shoppers with impeccable credit scores qualify for these incentives.

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