Yes, financing a used car for 72 months is possible but comes with higher interest rates and risks.
Understanding the Basics of Used Car Financing Terms
Financing a used car over an extended period, such as 72 months, means spreading out your payments across six years. While this can lower your monthly payment, it also means paying more interest over time. Lenders often view longer loan terms as riskier, especially for used vehicles. This risk translates into higher interest rates or stricter loan requirements.
Used cars typically depreciate faster than new ones, and a 72-month loan might mean you owe more than the car is worth for a significant portion of the loan term. This situation is called being “upside down” on your loan. It’s crucial to weigh these factors before committing to such lengthy financing.
Why Lenders Offer 72-Month Used Car Loans
Financial institutions and dealerships offer long-term loans like 72 months primarily to make monthly payments more affordable. Lower monthly payments can attract buyers who might otherwise struggle with upfront costs or higher monthly installments.
However, lenders balance this by charging higher interest rates due to the increased risk of default over a longer time frame. They also consider the vehicle’s age and condition; older cars may not qualify for such long terms because their value diminishes quickly.
Typical Interest Rates for 72-Month Used Car Loans
Interest rates vary widely based on credit score, lender policies, and vehicle specifics. Here’s a snapshot of average APRs (Annual Percentage Rates) you might expect:
| Credit Score Range | Average APR (%) for Used Cars | Loan Term Impact |
|---|---|---|
| 720 and above (Excellent) | 4.5% – 6% | Slight increase with longer terms |
| 660 – 719 (Good) | 7% – 10% | Slightly higher for 72 months loans |
| <660 (Fair to Poor) | 12% – 20%+ | Avoid long terms if possible |
Longer terms like 72 months tend to push these rates up by approximately one or two percentage points compared to shorter loans.
The Pros of Financing a Used Car Over 72 Months
Financing over six years can be tempting for many reasons. The biggest advantage is affordability—lower monthly payments free up cash flow for other expenses or savings goals.
Another benefit is that buyers with less-than-perfect credit might still qualify for longer-term loans when shorter options are unavailable. It gives flexibility in budgeting without requiring a large down payment upfront.
Additionally, some lenders offer promotional rates or incentives on extended loans during certain times of the year, making it easier to access financing despite weaker credit.
The Cons: What You Should Watch Out For
While lower monthly payments sound great, they come at a cost. Paying interest over six years means you’ll spend significantly more overall compared to shorter loans. The total cost of ownership increases sharply.
Depreciation also plays a big role here. Most used cars lose value quickly within the first few years after purchase. A lengthy loan term means you risk owing more on the loan than your car’s market value — a risky position if you want to sell or trade in early.
Moreover, older vehicles financed over long periods may require costly repairs that aren’t covered by warranties anymore. This could strain your budget further while still making payments on the car loan.
The Impact of Vehicle Age and Mileage on Loan Approval
Lenders typically have restrictions on how old or high-mileage a vehicle can be to qualify for long-term financing like 72 months. Many banks and credit unions limit loans on used cars older than seven or eight years or with mileage exceeding 100,000 miles.
This is because older cars are more prone to breakdowns and lose value faster — increasing lender risk. If your chosen vehicle falls outside these limits, you might only get approved for shorter terms or face higher interest rates.
Some lenders specialize in subprime auto loans and may be more flexible but at the cost of significantly higher APRs and fees.
Navigating Loan Terms With Different Lenders
Dealerships often advertise easy approvals and long-term financing options but tend to charge higher interest rates compared to banks or credit unions. It’s wise to shop around and compare offers before signing anything.
Banks usually provide competitive rates but have stricter qualification criteria regarding credit scores and vehicle conditions. Credit unions are known for favorable terms but membership eligibility may limit access.
Online lenders have emerged as convenient options offering pre-qualification checks without impacting credit scores initially — helpful when considering whether you can finance a used car for 72 months.
The Financial Breakdown: Monthly Payments vs Total Cost
Let’s look at how extending your loan term affects monthly payments and total interest paid using an example:
Suppose you’re buying a $15,000 used car with an APR of 7%. Here’s how different loan lengths compare:
| Loan Term (Months) | Monthly Payment ($) | Total Interest Paid ($) |
|---|---|---|
| 36 (3 years) | $463 | $668 |
| 48 (4 years) | $358 | $1,184 |
| 72 (6 years) | $250 | $3,001 |
Notice how the monthly payment drops dramatically at 72 months but the total interest paid nearly triples compared to a three-year term. This illustrates why longer loans often cost much more in the long run despite seeming affordable month-to-month.
Tips To Secure Better Financing Terms For Long Loans
- Your Credit Score Matters: Improving your credit score before applying can lower your APR significantly.
- Larger Down Payment: Putting down more money upfront reduces the amount financed and lowers risk.
- Select Newer Vehicles:If possible, opt for newer used cars with fewer miles that lenders prefer.
- Avoid Add-Ons:Lenders add-ons like extended warranties or insurance can increase loan amounts unnecessarily.
- Cautiously Consider Refinancing:If better rates become available later, refinancing could save money.
- Diligently Read Loan Agreements:You want clear terms about prepayment penalties or fees that could affect overall costs.
- Bargain Hard at Dealerships:A better purchase price lowers financing amounts directly.
- Avoid Rolling Over Negative Equity:If trading in an old vehicle with remaining balance owed, don’t add that debt into your new loan.
The Risks Behind Financing Long-Term Loans on Used Cars
Long-term auto loans carry inherent risks beyond just paying more interest:
Your vehicle will likely require maintenance as it ages during this extended period—repairs might outpace what you budgeted.
If you face financial hardship mid-loan, having lower equity makes it harder to sell or trade in without incurring losses.
Lenders sometimes include clauses allowing repossession if payments fall behind; longer commitments increase exposure to such scenarios.
You could get stuck with outdated technology or safety features after six years as newer models hit the market.
A lengthy commitment reduces flexibility should your transportation needs change drastically—like relocating far from dealerships servicing your brand.
Key Takeaways: Can You Finance A Used Car For 72 Months?
➤ 72-month loans are available for used cars but less common.
➤ Longer terms lower monthly payments but increase total cost.
➤ Interest rates may be higher for extended used car loans.
➤ Check lender policies; some limit loan length on used vehicles.
➤ Consider vehicle depreciation when choosing loan duration.
Frequently Asked Questions
Can You Finance A Used Car For 72 Months?
Yes, you can finance a used car for 72 months. This longer loan term spreads payments over six years, reducing monthly costs. However, it often comes with higher interest rates and increased risk due to the vehicle’s depreciation and lender policies.
What Are The Risks When You Finance A Used Car For 72 Months?
Financing a used car for 72 months increases the chance of owing more than the car’s value, known as being “upside down.” Longer terms also mean paying more interest overall and facing stricter loan requirements from lenders.
Why Do Lenders Offer 72-Month Financing On Used Cars?
Lenders offer 72-month loans to make monthly payments more affordable and attract buyers who need lower installments. They balance this by charging higher interest rates due to the greater risk over an extended loan period.
How Do Interest Rates Change When You Finance A Used Car For 72 Months?
Interest rates typically increase for 72-month used car loans compared to shorter terms. Rates depend on credit score and vehicle age but generally rise by one or two percentage points for longer financing periods.
What Are The Advantages Of Financing A Used Car For 72 Months?
The main advantage is lower monthly payments, which can help with budgeting and cash flow. It also allows buyers with less-than-perfect credit to qualify for financing when shorter-term loans might not be available.