Is a 72-Month Car Loan Worth It? The Real Cost vs a 60-Month Loan
The lower monthly payment is real — but so is the extra interest, and the years you can spend owing more than the car is worth. Here is the full 60-vs-72 math.
The 72-month car loan has quietly become the default. The average new-car loan now runs close to 69 months, and dealers tend to steer the conversation toward the monthly payment — the one number where a longer term always looks better. Stretch a loan from 60 to 72 months and the payment drops by about a hundred dollars: same car, same price, less out of pocket each month. The catch is that the monthly payment is only part of the story, and the rest of it is where a 72-month loan quietly costs you.
The appeal of a 72-month loan: a lower monthly payment
On paper, the longer term is tempting, and the reason is simple. The same car at the same price costs less each month, so the 72-month option feels more affordable the instant you compare payments. That is exactly why so many purchases are now written this way. In its Q3 2025 data, Experian put the average new-car loan at $42,332, the average payment at $748 a month, and the average term at about 69 months — already past the old 60-month standard (Experian, average car payment).
The problem is that "how much per month" answers only half the question. The other half — how much the car costs you in total, and how long you spend owing more than it is worth — moves in the opposite direction when you stretch the term.
What a 72-month loan actually costs
Take a $40,000 loan, close to the current new-car average, and run it two ways at rates near recent averages. A 60-month loan at 6.5% and a 72-month loan at 7.5% — the longer term usually carries the higher rate — look like this:
| $40,000 loan | 60 months @ 6.5% | 72 months @ 7.5% |
|---|---|---|
| Monthly payment | $783 | $692 |
| Total interest | $6,959 | $9,796 |
| Loan balance after 1 year | $33,002 | $34,515 |
The 72-month loan saves about $91 a month — but costs about $2,840 more in total interest. You are effectively borrowing that monthly savings back from the lender and paying interest on it for six years.
Every number here comes from the standard amortization formula, so you can check it: M = P · r(1 + r)n / ((1 + r)n − 1), where P is the amount financed, r is the monthly rate (APR ÷ 12), and n is the number of months; total interest is M · n − P. Two forces push the 72-month cost up:
- You pay interest for longer. The balance comes down more slowly, so interest keeps accruing on a larger amount for an extra year. Hold the rate identical at 7% on both loans and the 72-month term still costs about $1,580 more in interest — that is the pure cost of the extra year.
- The rate is usually higher. Longer terms carry more risk for the lender, so 72- and 84-month loans typically come with a higher APR than a 60-month loan. That premium stacks on top of the extra year, which is how the gap widens from about $1,580 to roughly $2,840 in the example above.
The real risk isn't the interest — it's staying underwater
Here is the part most 60-vs-72 comparisons skip. A car loses value from the day you drive it off the lot — a new vehicle sheds roughly 15% to 20% in the first year (Experian's data puts the average near 16%), about 28–30% over two years, and roughly 55% over five (Experian, car depreciation). Because a 72-month loan pays the principal down slowly, the loan balance stays above the car's value — a state called being "underwater," or having negative equity — for much longer.
Look back at the example. After one year, the 72-month borrower still owes about $34,515, while the car is worth somewhere around $32,000 to $33,600 depending on how fast it depreciated. That borrower is underwater. The 60-month borrower owes about $33,002 on the same car — roughly break-even, and climbing into positive equity fast. The 72-month loan doesn't just cost more interest; it keeps you in the danger zone deeper and longer.
Why does that matter if you plan to keep the car? Because plans change. If you sell, trade in, or total the car while underwater, you have to cover the difference between the loan balance and the car's value in cash — or roll it into your next loan. Federal data shows how costly that becomes. In its June 2024 Negative Equity in Auto Lending report (covering about 34 million loans from 2018–2022), the Consumer Financial Protection Bureau found that borrowers who rolled negative equity into a new loan were more than twice as likely to have the account sent to repossession within two years than borrowers with a positive-equity trade-in. Those same borrowers also had the longest loans — an average term of 73 months, versus 67 to 68 months for buyers who weren't underwater.
To be clear about what this data does and doesn't say: the CFPB is not claiming that a 72-month term causes repossession. The chain is more subtle — longer terms and high loan-to-value ratios keep buyers underwater longer, being underwater is what produces negative equity to roll into the next purchase, and rolling negative equity is what the data links to worse outcomes. A 72-month loan simply puts you further along that chain than a 60-month loan does.
When a 72-month loan does make sense
Longer isn't always wrong. There are three situations where a 72-month term is a reasonable choice:
- A genuine low-rate promotion. If a manufacturer is offering 0% to about 2% financing, the interest penalty of the longer term nearly disappears, and you get the lower payment almost for free. (Just weigh a 0% offer against any cash rebate you'd give up — that is a separate calculation.)
- You will keep the car for the long haul. If you reliably drive cars seven to ten years, you simply ride out the underwater period and come out the other side. The negative-equity risk mostly applies to people who sell or trade before the loan is paid down.
- Cash flow is genuinely tight. A lower payment can beat missing payments. But in this case the more honest fix is often a cheaper car — the CFPB found negative equity was most common on lower-priced vehicles, where buyers stretched to make the monthly number work.
The signals to avoid a 72-month loan: you tend to trade cars in every three to four years, the rate is a standard (not promotional) one, or you are already carrying negative equity from your last car. Any of those, and the extra year works against you.
How to decide
Turning this into a quick answer for your own purchase takes four steps:
- Compare on total interest, not the monthly payment. The payment is designed to make the longer term look better. Line up the total interest for 60 and 72 months and the trade-off becomes obvious.
- Answer honestly: how long will you keep this car? If the answer is shorter than the loan term, a 72-month loan is a real risk, not a convenience.
- If the 60-month payment doesn't fit, fix the price — not the term. A bigger down payment or a less expensive car lowers both the interest and the time you spend underwater. Stretching the term does neither.
- Run your actual numbers. Put your real price, rate, and down payment into the calculator below, then flip the term between 60 and 72 months and watch both the payment and the total interest move.
For the surrounding decisions, our companion guides cover how much a single point of rate is worth in How Much Does 1% APR Really Cost on a Car Loan?, how each rate maps to a monthly payment in How Your Interest Rate Changes Your Car Payment, and the full five-year cost of a typical loan in The Real Total Cost of a $30K Car Loan.
Frequently Asked Questions
Is a 72-month car loan a bad idea?
Not always, but for most buyers a 60-month loan is the better deal. A 72-month term lowers the monthly payment by roughly $90 to $110, but it adds about $1,600 to $2,800 or more in total interest and keeps you owing more than the car is worth for longer. It mainly makes sense with a genuine low-rate promotion or a plan to keep the car well past payoff.
How much more does a 72-month loan cost than a 60-month one?
On a $40,000 loan, roughly $1,600 to $2,840 more in total interest. Even at the same rate — say 7% on both — the extra year of payments adds about $1,580. Because longer terms usually carry a higher rate too, a realistic 6.5% versus 7.5% comparison widens the gap to about $2,840, while cutting the monthly payment by only about $91.
Why is the interest rate higher on a 72-month loan?
Because a longer term is riskier for the lender. The more months you take to repay, the more time there is for your finances — or the car's value — to deteriorate, so lenders typically attach a higher rate to 72- and 84-month loans than to 60-month ones. That rate premium stacks on top of the extra interest you already pay for borrowing longer.
What does it mean to be underwater on a car loan?
Being underwater, or having negative equity, means you owe more on the loan than the car is currently worth. A new car loses roughly 15% to 20% of its value in the first year, and a 72-month loan pays the principal down slowly, so the balance stays above the car's value for longer. If you sell or total the car during that window, you have to cover the gap in cash.
When is a 72-month car loan worth it?
In three situations: a genuine low-rate promotion (0% to about 2%), where the interest penalty of the longer term mostly disappears; a firm plan to keep the car seven to ten years, so you simply ride out the underwater period; or a tight budget where the lower payment is genuinely necessary — though in that last case, a cheaper car is often the better answer.
Should I choose a shorter loan or make a bigger down payment?
Both reduce the total interest you pay. If a 60-month payment feels too high, increasing your down payment or choosing a less expensive car usually beats stretching to 72 months, because it lowers both the interest cost and the length of time you spend underwater. Reserve the longer term for cases where a promotional rate or long ownership plan justifies it.
Bottom line
A 72-month car loan buys you a smaller monthly payment, and that is genuinely useful in a pinch. But you pay for it twice: about $1,600 to $2,800 or more in extra interest, and a longer stretch spent underwater, owing more than the car is worth — the same condition federal data ties to more than double the repossession risk when it follows you into the next loan. Unless you have a real low-rate promotion or you know you will keep the car well past payoff, the 60-month loan wins on the numbers that actually matter. Compare on total interest, be honest about how long you'll keep the car, and if the shorter payment is a stretch, fix the price rather than the term.
- Consumer Financial Protection Bureau, Negative Equity in Auto Lending (June 2024)
- Experian, Average Car Payment (Q3 2025 loan amount, payment, and term)
- Experian, How Much Do Cars Depreciate Per Year?
This article is general information, not financial advice. Interest rates, average figures, and depreciation vary by lender, credit profile, vehicle, and time. Confirm current terms with your lender and consider a licensed financial professional for your specific situation.