• Apr 11, 2013
Longer car loans are becoming the norm (TheTruthAbout..... Longer car loans are becoming the norm (TheTruthAbout..., Flickr).
Here's a list of things you could do in the next six years:

Have a baby, and raise him or her until it's time for Kindergarten.

Go to law school. Twice.

Serve one term as a U.S. Senator.

Get an undergraduate degree and a master's degree.

Get married long enough to get sick of your spouse (and by year eight, get a divorce.)

Or, you could buy a car with a 72-month loan and hang on to that puppy until you are good and sick of it.

The percentage of car sales with a 72-month or longer loan has hit record levels, according to recent studies by both J.D. Power and LMC Automotive and Experian Automotive.

"72 months has become the new 60 in the loan market," said Melinda Zabritski, director of automotive credit for Experian.

J.D. Power found that 72-month terms are at record levels, accounting for 32.1 in recent months. Overall, the data shows that the average term for a car loan is currently 65 months.

"Lower interest rates and longer loan terms made it easier for consumers to finance a vehicle while keeping their payments affordable," said Zabritski.

TOP 5Most Popular Vehicles On AOL Autos
While it may sound awesome to keep car payments low, long loans are problematic. People's lives change, making a 72-month commitment to a car seem ludicrous.

Cars are becoming more and more expensive: The average price paid for a new vehicles right now is around $31,000, up from about $28,000 four years ago. The monthly payment that goes along with that price can be difficult for car buyers to stomach -- The Wall Street Journal reported that buyers like to keep their payment under $500 -- so longer term loans are increasingly becoming the norm in an effort to move more cars off of dealer lots.

Recent reports have shown that lenders are even introducing 75- or 95-month loans, too, and that 97-month loans could become the norm within the next 5 years. (Which is longer than many marriages.)

Should you get a 72-month (or longer) loan?

Since so many people are opting for longer loans, is this a good idea for you, too?

As you may have guessed, the answer to that question is: It depends.

It's certainly tempting to get a longer loan, considering that it brings your monthly payment down, making a car much more affordable and even allowing you to get in a car that is a little more expensive. But, as Zabritski at Experian told AOL Autos, car buyers that opt for this type of loan have to be careful.

"The way that a longer loan becomes a bad idea is if consumers don't hold onto their vehicles or if you didn't put enough money down," she said.

If you want to go with a longer loan term, it's best to either put a lot of money down or keep your car for longer. This can keep you out of financial trouble down the line. Since a new vehicle depreciates literally the second it is driven off of the lot, not putting enough money down can lead to you becoming what's known as "upside down" on your loan. This means that if you want to sell or trade your car, its value won't be enough to cover what you have left to pay on the loan. Not good.

In short, if you plan on keeping your car for a long time (5+ years), a 72-month or even a 97-month loan can be a good option, considering how it can reduce your monthly payments. But, if you're like many car buyers and prefer to swap your cars out every couple of years, it's best to go with a shorter term loan or, at the very least, put a sizable amount of money down on a longer term one.

Another option

People are opting for longer loan terms because it keeps monthly payments low, but there is another way to do this without subjecting yourself to the risk of becoming upside-down: Get a cheaper car.

While this may seem like an obvious solution, many people seem to skip right over it. Instead of paying for a $31,000+ vehicle, look at others that cost $19,000-$25,000. While you may sacrifice some creature comforts or badge recognition, the reality is that sub-$30,000 cars are often close to or just as good as those that cost more.

New technology and manufacturing techniques have made less expensive cars safer, quieter, more fun to drive and, simply, better. Instead of a big, loaded sedan, look at smaller ones, like a Chevrolet Cruze. Instead of a huge SUV, look at a smaller crossover like the Hyundai Santa Fe Sport.

As car prices (and gas prices) continue to go up, you as a consumer should think even harder about what you really need out of your vehicle and what is optional to ensure your long-term ownership experience is a positive one.

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    • 1 Second Ago
  • 33 Comments
      unshy13
      • 1 Year Ago
      Well lets think about this in government terms. We lower interest rates and let people with questionable credit and earning ability purchase loans for longer so they can meet the payment requirements. I've been wondering for quite a while now how Joe Schmoe fast food worker can afford a brand new (last 2-4 years old) car/truck. So he pays his small payment, keeps a good running car and pays insurrance on it. Everyone wins except him. The gonvernment get's their taxes, the dealership makes a sale, and the insurrance company gets a new mandatory client. And of course little Schmoe doesn't miss a payment because it's only $150 or whatever it is. To bad he's paying for it for the next 8 years. Again, people need to make better choices. People call it class warfare when the government tries to raise standards, but it's not. It's placed to protect the people. If you want a better life, you need to make better choices. Plain and simple. I personally beleive buying anything other than a house on credit is stupid. If you can't afford it, don't buy it. (and yes.. even a house is questionable now days.. i get it)
      zygi & paris
      • 1 Year Ago
      No car is worth paying a lifetime for. Stupid.
      You Sexy Bitch..
      • 1 Year Ago
      do you think the average person buys around seven cars in their lifetime?My way would save as much money per month towards a good used car for two years and apply it when purchasing it.you will save on finance charges,taxes,insurance,etc. and still have a good car.the monthly payments some people are paying and the length of the loan is staggering.the loan companies are getting rich and you are strapped with payments for a long time.plus you might be paying almost double for the vehicle when the loan is finished.be patient for it is a virtue and everyone wins.
      wrxfrk16
      • 1 Year Ago
      This isn't actually that bad an idea if you pick wisely. A 6 year loan on a car you'll be sick of in three months is quite obviously a terrible decision. But the right cars, they don't just become used cars, they almost become part of the owner's family. Most cars today are more reliable and lasting much longer than they've ever been before, so if you really do your homework and drive all the competition and get what you really want, the six years isn't that long a span in the scheme of things.
      • 1 Year Ago
      Just another way for the car industry to make more money off of the working people - I bought a used car that has been a nightmare to own - where is my government bail out?
      Randie Donoff
      • 1 Year Ago
      upto I saw the draft which was of $7080, I didnt believe ...that...my brother woz like they say realie bringing home money parttime on their laptop.. there friends cousin haz done this for less than thirteen months and just now cleared the dept on their apartment and bourt a great Mazda MX-5. I went here............ ZOO80.COM
      billine123
      • 1 Year Ago
      I don't know how the average middle class person can afford a new car payment, a roof over their head and food on their table. My first house cost 17,000 at 5.25% interest for 30 years. Cars are now double that and they want them paid in 6-7 years at whatever the current prevailing interest rate is. Then we had cash for clunkers that took many cars out of the picture so the poor middle class guy that wanted to keep his older car can no longer get parts at reasonalbe prices.
      Practical Nomad
      • 1 Year Ago
      Longer amortization isn't a good option for a vehicle, however, the average consumer has little choice with today's MSRP. At today's prices, most consumers find their car payments range from $400.00 to $1,200.00 monthly, depending on the automobile and down payment/trade of course. I think the best option for most would be a balloon payment. Allow the customer(s) to amortize longer for the reduced payment and balloon the balance in 24 to 36 months. As long as the financing is "simple interest" borrower's can pre-pay if possible and refinance the balloon. Payment controls the purchase, car sales would increase substantially with greater finance options to reduce payments. Leasing used to be an option for reduced payments, but leasing seems to have moved away from this and therefore curtails leasing/sales.
      janka51
      • 1 Year Ago
      it don't matter , long as you buy American cars
        rdmaguder
        • 1 Year Ago
        @janka51
        Agree - American quality is much better than previously.
        rjackson2a
        • 1 Year Ago
        @janka51
        And what is an American car these days? A Chevy built in Mexico, or a Honda built in Ohio?
      hgeorgech
      • 1 Year Ago
      Bottom line .. anyone who opts for a 72 month auto loan (even if it were to be at zero % interest which it wouldn't) simply cannot afford that particular can ... NO auto loan should go beyond 48-60 mos; else the borrower is simply in dreamland .. buy what you can actually afford!
        wrxfrk16
        • 1 Year Ago
        @hgeorgech
        Why can't they? If they make the payments each month, how are they not able to afford it? I couldn't pay cash for my home, but I'm making the payments every month. And that's a thirty year loan, this car loan's a fifth of that. If you do your homework and get something you really are going to enjoy for six years it can actually wind up working in your favor. What's more economical, paying for one great car for six years, or paying off one half decent box in three, then selling it at a loss to buy another box which you'll pay off in three and subsequently be sick of as well?
          insanemstng
          • 1 Year Ago
          @wrxfrk16
          If you need a thirty year loan you also bought a house you could not afford!!!!! Daaammmm just think of how much interest you paid out on it!!!!
          arvig
          • 1 Year Ago
          @wrxfrk16
          @insanemstng: As I pointed out to hgerogech, using your logic ANY loan in effect means one can't afford something. One isn't using one's own money, they are using a bank's and then making payments. :P
        arvig
        • 1 Year Ago
        @hgeorgech
        Although I do think people should go for the shortest term loan that they CAN afford, using your "logic" means that if one gets ANY loan, they in effect can't afford it. Why make the cutoff 48 to 60 months? At one time a 60 month loan was seen as almost excessive. Then it became the norm, and now 72 months is starting to become the norm. Again I don't advocate getting too long of a loan if one doesn't have to, but if you're going to harp on 72 month loans, you may as well harp on all of them.
      jokinok1
      • 1 Year Ago
      The first new car I bought was financed for 18 months.
      • 1 Year Ago
      A 6 year loan with a 6 year warranty should come standard. If you have to make car payments, full coverage insurance payments, rising fuel payments and have to maintain the vehicle, it becomes a serious burden that usually rivals a full blown house mortgage.
        juststeve35
        • 1 Year Ago
        Absurd, pretzel logic... If you think a 6 year loan should force a 6 year warranty to come free/standard, that must mean you think someone paying cash should get NO warranty? OR a 3 year loan should only come with a 3 year warranty on the car?
          Camille
          • 1 Year Ago
          @juststeve35
          I think they have that option because I had that option put into my contract when I did six years. I still have my car even though it's out of warranty. Firestone where I live does a great job in maintaning it and my mother still has her car which is older than mine and runs great.
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