Should You Finance a Car for 72 Months? Pros and Cons, Tips, and Mistakes to Avoid

Introduction

Buying a car is a major purchase, and many people find themselves considering financing options as a way to spread out the cost. One popular option is to finance a car for 72 months, which means that you would have six years to pay off the loan. This can be attractive to those who don’t have the cash up front or who want to keep their monthly payments low. However, while there are some advantages to this option, it’s important to weigh both the pros and cons before deciding if financing a car for 72 months is right for you.

Pros and Cons of Financing a Car for 72 Months

Advantages

One of the main advantages of financing a car for 72 months is that it allows you to keep your monthly payments lower than if you were to finance the vehicle for a shorter period of time. According to a study by Experian Automotive, “the average monthly payment for a new car loan in the fourth quarter of 2015 was $479 for a 60-month loan, compared with $387 for a 72-month loan.” This can make the car more affordable, especially for those on a tight budget.

Another advantage is that you may have more flexibility in terms of the type of car you can buy. For example, if you only have enough money saved up for a cheaper model, you can still opt for a higher-end car if you choose to finance it over a longer period of time.

Disadvantages

The primary disadvantage of financing a car for 72 months is that you will end up paying more in interest. The longer you take to pay off the loan, the more interest you will accrue. This can add significantly to the total cost of the car. Additionally, you may be charged a higher interest rate for a longer-term loan, which can further increase the amount of money you pay over the life of the loan.

Another potential downside is that you may end up owing more money than the car is worth by the time you finish paying off the loan. This can be an issue if you decide to trade in the car or sell it before the loan is paid off.

How to Decide if You Should Finance a Car for 72 Months

Evaluating Your Financial Situation

Before deciding to finance a car for 72 months, it’s important to evaluate your current financial situation. Ask yourself if you can afford the monthly payments, and consider whether you would be able to handle any unexpected expenses that may arise. It’s also a good idea to review your credit score, as this can affect the interest rate you will be offered. If your score is not in good shape, you may want to take steps to improve it before applying for a loan.

Calculating Total Cost

In addition to evaluating your financial situation, it’s important to calculate the total cost of the car when considering a 72-month loan. This includes not only the purchase price but also other costs such as taxes, registration fees, and insurance. You should also factor in any interest charges that will be added to the loan. Once you have all the figures in front of you, you can determine whether or not financing the car for 72 months is within your budget.

Tips for Getting the Best Deal When Financing a Car for 72 Months

Shopping Around

When looking for a lender, it’s important to shop around and compare rates from different banks and credit unions. It’s also a good idea to check online lenders, as they may be able to offer better terms. Keep in mind that the lowest rate isn’t always the best option; you should also consider the length of the loan and other factors.

Negotiating

Once you’ve found a lender, you should try to negotiate the best possible terms. This includes the interest rate, monthly payments, and any additional fees or charges. Don’t be afraid to ask questions or demand a better deal; the lender may be willing to work with you to get the best possible terms.

Researching Interest Rates

It’s also important to research interest rates before agreeing to a loan. Some lenders may offer promotional rates that are lower than the standard rate, so be sure to inquire about these. Additionally, you should read the fine print of the loan agreement carefully to ensure that you understand all the fees and charges associated with the loan.

What to Consider Before Financing a Car for 72 Months

Length of Payments

When considering financing a car for 72 months, it’s important to think about the length of the payments. Six years is a long time to be making payments, so make sure you are comfortable committing to such a long-term loan.

Long-Term Commitment

In addition to the length of the payments, it’s important to consider the long-term commitment of financing a car for 72 months. You will be locked into the loan for the entire period, so if your circumstances change or you decide you want to upgrade to a newer model, you may be stuck with the loan until it is paid off.

Down Payment

Many lenders require a down payment when financing a car for 72 months, so it’s important to consider how much you can realistically put down. A larger down payment can lower your monthly payments and save you money in the long run, but it may not be feasible for you depending on your financial situation.

Loan Terms

Finally, it’s essential to understand the loan terms before agreeing to finance a car for 72 months. Be sure to read the entire contract and ask questions if anything is unclear. Make sure you understand the interest rate, monthly payments, and any additional fees or charges.

Common Mistakes to Avoid When Financing a Car for 72 Months

Not Shopping Around

As mentioned earlier, it’s important to shop around and compare rates from different lenders. Not doing so could mean missing out on a better deal, so be sure to take the time to compare offers.

Not Researching Interest Rates

Before agreeing to a loan, it’s important to research the interest rates. Some lenders may offer promotional rates that are lower than the standard rate, so make sure to inquire about these before signing on the dotted line.

Not Understanding Loan Terms

Finally, it’s essential to understand the loan terms before agreeing to finance a car for 72 months. Be sure to read the entire contract and ask questions if anything is unclear. Make sure you understand the interest rate, monthly payments, and any additional fees or charges.

How to Protect Yourself When Financing a Car for 72 Months

Reading the Contract Carefully

Before signing any paperwork, it’s important to read the contract carefully. Make sure you understand all the terms and conditions, and ask questions if anything is unclear. If the lender is unwilling to answer your questions or provide clarification, consider taking your business elsewhere.

Asking Questions

Don’t be afraid to ask questions when considering financing a car for 72 months. Be sure to inquire about interest rates, monthly payments, and any additional fees or charges. It’s also a good idea to ask about the lender’s policies in case you need to make changes to the loan in the future.

Seeking Advice from Experts

If you’re unsure about whether or not financing a car for 72 months is right for you, it’s a good idea to seek advice from experts. Consult a financial advisor or auto loan specialist to discuss your options and get an unbiased opinion.

Conclusion

Financing a car for 72 months is not for everyone. Before deciding if it’s right for you, it’s important to weigh both the pros and cons and evaluate your financial situation. Additionally, it’s essential to shop around for the best deal, understand the loan terms, and protect yourself when making such a long-term commitment. By following these tips, you can ensure that you get the best deal and make the most of your car financing experience.