72 Month Car Loan: Getting The Best Rate

March 18, 2013

If you're thinking of buying a new or used car with a 72 month car loan, then you should be aware that 72 months is a very long time to make car payments on any vehicle.

calendar with months

Furthermore, you will be making car payments a lot longer than the manufacturer warranty will apply. As time goes by, there will come a time you may need to pay for expensive repairs as well. However, if you're determined to purchase your next new car or truck with a 72 month car loan, you should try to get the lowest rate available to you.

Apply now for a 72-Month Car Loan or read below for more information.

Before we get into where to get a 72 month car loan, let's look at some of the advantages and disadvantages of this type of loan:

Advantages:

  • Low payments - for someone on a fixed income, a 72 month car loan can be a way to keep payments low enough to budget into a household income. Even though the borrower will be paying more long-term, budgeted payments are beneficial because they "won't break the bank"-that is, there is less chance of a cash crunch that will leave a bank account emptied with overdraft fees or worse.
  • More time to keep a vehicle - a 72 month car loan, in contrast to some other loan types, essentially buys a borrower time. Over the long time that they are making these lower payments, they also get to drive the vehicle, which may help them earn more income or more profitably run a small business. Where larger payments may theoretically lead to repossession, smaller payments can mean more control by the borrower.
  • Refinancing - a 72 month car loan can always be refinanced down the road. That's not to say that a buyer will usually get huge savings from refinancing, but in some cases, a longer-term car loan can benefit from changes in the US prime lending rate.
  • Beneficial uses - a 72 month car loan is a great option for a driver who may have a fixed income, small savings and the desire to make just one single investment over a long period of time. In other words, if a new or used vehicle is your main financial liability, you may be okay with paying on it for 6 years. You might even be okay with paying the much higher total interest that a long-term car loan, such as a 72 month car loan, adds up to. Although a longer-term loan leaves buyers paying more in the end, the fixed rates associated with the loan, as well as the smaller payments, help borrowers navigate the road ahead and have a plan for what they are buying.

Disadvantages:

  • A 72 month car loan can be extremely hard to qualify for - in a down market, lenders get nervous, and the first thing they're going to do is to stop handing out long-term loans that can be treated as "free money" by borrowers who may enjoy low payments for several months to a year before defaulting. As a result, the credit and income requirements for these long-term loans have become pretty steep, and for many, a 72 month car loan is hard to get.
  • Borrowers are back-loading payment - in a 72 month car loan, borrowers are doing the opposite of what many experts would recommend: piling debt on to the end of a cycle, rather than the beginning. The best way to approach a loan is to make a large down payment and keep monthly payments high, so that interest does not have time to snowball into mammoth proportions.
  • Lazy borrowers can invite negative equity situations - negative equity is when a driver owes more on a vehicle than what that vehicle is currently worth. That's what happens when low payments do not effectively pay down a debt at the rate of the vehicle's depreciation. Another problem is that down the road, if anything happens to the vehicle, the driver can be left making payments for years on something that he or she does not even use. Click here for more information on Negative Car Equity.
  • A 72 month car loan can be hard to follow - because of some specific kinds of car loans where interest rates change, a long-term car loan can be almost completely incomprehensible to the borrower. If you're financing from a dealership, the 72 month car loan means more time for the dealer to slip in provisions that will have you paying more at the end of the loan cycle. The basic rule: if there's something that you don't understand, don't sign.

That being said, if you still want to get a 72 month car loan, here are a few ideas for where to start looking:

Credit Unions
If you're a member of your local credit union, you may just be in luck. Credit unions generally have some of the lowest interest rates on any type of new or used car loan. Rates for 72 month car loans will certainly be among the lowest that are available. If you're not a member of a credit union, inquire to several in your area; you might find that joining the credit union is much easier than you think. Under most circumstances, almost everyone is eligible to be a member of one credit union or another. Therefore, call as many as you need to - until you find one that you're eligible to join.

Captive Finance Companies
Captive finance companies are the finance companies of the manufacturers themselves. Typically, captive finance companies are actually subsidiary companies of the car manufacturer. In fact, if you've ever financed a car with one of the lenders that the dealership offers you, then chances are you already have done business with a captive finance company. For example, GMAC finance is owned by General Motors and Ford Motor Credit is owned by Ford Motor Company. There are times that captive finance companies offer incredible deals on 72 month financing. However, when these deals are available, you generally have to possess excellent credit to take advantage of them. If you do have great credit and captive finance companies are making these types of offers, you may be able to receive interest rates that will not be available any place else.

For example, you've probably seen the big manufacturers offering 0% financing on auto loans. Well, 0% financing will never be available for a 72 month loan; however, when there are 0% specials, you may be able to take advantage of lower than usual interest rates - even with a 72 month loan.

Online Lenders
If you need a 72 month car loan, you can find several places to apply online. Those who might be interested in a longer loan include those who really need a car, but also need to have payments that are moderate as well as those who want to buy a very expensive car but want to control the size of the payments.

Apply Online >>

Extending the repayment period on loans is one way to reduce the monthly payments. According to car experts at Kelley Blue Book, for every 10 car buyers, 6 are obtaining these longer term loans, while the average car loan is generally offered from 3 to 5 years.

Looking for an auto loan online can be a good idea when you are trying to find a 72-month car loan. Online lenders are sometimes more willing to look at alternative financing options than traditional lenders, and it is easier to access a large number of dealers. Some of the places you may look for online lenders who will offer a 72-month car loan include the places you look for cars or car information online. Many of these sites also offer financing and include Cars.com, Yahoo! Autos, and Edumunds.com, among others.

At these sites, you can do research on different types of cars, find cars for sale and apply for loans. You can also get quotes or pre-approval on loans. Other sites you can visit include those that concentrate on financing in general and are not car-specific websites. These websites offer car loans, including 72-month car loans, but they also offer other types of loans, including mortgages. These sites include LendingTree.com, Bankrate.com and Eloan.

CarsDirect Financing
CarsDirect helps more credit-challenged customers find car loans than any other website in the country. The company works with a network of dealers who specialize in car loan financing. The dealer has access to a number of financial institutions and will shop around to find you the best deal. Just fill out a simple application and you will be on your way to receiving a car loan.

Types of Quotes:
After you find an online lender that does take applications for 72-month loans, you may get different types of quotes.

  • For example, Cars.com and Edmunds.com will return quotes from only 2 different lenders. One of the ways Cars.com makes money is to provide auto loans, so they are in the 72-month loan business as well as in the auto information business. From both of these sites, you may get a quote from Cars.com themselves, or you may get a quote from their partner, Up2Drive.
  • At Yahoo! Cars, however, you can get a quote from any of their partner lenders, of which there are up to 6, depending on your situation and their current partner agreements.
  • At LendingTree.com and Bankrate.com, you will receive many quotes directly from a variety of lenders. These sites allow you to get an idea of all your options. They can also give you a good idea of what kind of terms you might get if you went to a traditional lender in your city.
  • E-loan does provide a variety of quotes as well, but limits the returns to "partner lenders" so that the number of quotes is generally smaller than it is will the other 2 financial lenders.

Requirements for Getting a 72 Month Car Loan
In general, these are the things that you are going to need to have in order to be approved for a 72 month car loan:

  • Good Credit Score: Lenders that are giving out 72-month car loans are going to be looking for people who have good credit. Specifically, they are going to be looking for people who have a clean payment history record. They are relying on you to make regular, solid payments for 6 years. If they think that you are going to waver on regular payments, they are not going to give you a loan this lengthy
  • Large Down Payment: Getting a loan with little-to-no interest usually requires a large sum of money down. Make sure that you have enough money to make the initial payment or you will not be approved.
  • Proof of Income: Because of the length of the loan, the lender needs to make sure that you have a reliable source of income so that they can be sure you will continue to make your payments.

Getting a 72 Month Car Loan with Bad Credit
While people with bad credit will have a much harder time getting a 72 month car loan, it is not impossible. If you have bad credit, here are a few things that you can do to give yourself a better chance of being approved:

  1. Work with your personal bank above all other banks. If you have an upstanding credit and payment history with the bank, they may be more willing to overlook lower credit.
  2. Know your credit history: You need to be able to provide a written explanation of your credit history. Know where you messed up, know why your credit is bad and explain every instance.
  3. Wait a year. If you have bad credit, consider waiting on the 72 month loan. Taking a year to work on your credit could bring you to a credit score that will give you a good loan. It could take you 6 months to find a 72-month loan with a bad credit score. Taking a year could give you a better interest rate and better loan.
  4. See what kind of interest rates you can get >>

Comparing 72 Month Car Loan Offers:
Comparing one 72 month car loan to another will help you find the best loan terms and help you decide if a longer loan is the right thing for you. These loans commit you to 6 years of repayment, so you want to be sure you consider all the options and make a careful decision before you enter into such a lengthy commitment.

  • Find Competing Offers: In order to make a good comparison between loans and lenders, you need to see all the different options that exist for you. Look at online lenders and find a site that gives you several different offers to examine. Get at least 1 offer from a local bank or credit union. Many people dismiss local institutions, but they often offer a better rate and superior terns to online or huge national lenders. Have the terms you can get from other lenders in hand before you go to a dealer to negotiate a price or loan terms so that you have a great comparison for any deal they may offer.
  • Interest Rates: The most obvious comparison to make between 72-month car loans is to compare interest rates.Undoubtedly you are considering a longer loan because the additional length means smaller monthly payments for you. However, the interest rate also affects the size of your monthly payment. Compare the rates closely, since they can vary as much as 2 percentage points between lenders.Because longer loans are riskier for lenders, you will find more variation in interest rates than you will with shorter-term auto loans.
  • Loan Fees: Pay close attention to closing fees, origination fees, processing fees, etc. Before you enter into a contract, the lender needs to provide you with a full disclosure of any fees. While lenders usually wrap these fees into the loan, additional fees raise the payment you've been trying to lower. Make sure you are clear on exactly what you're paying in fees from each lender, and find the one with the best combination of interest rate and fees.
  • Prepayment Options: Particularly if you are obtaining a 72-month car loan, you will want to be sure and find a loan that has no penalty for prepayment. Prepayment on a loan means that you pay extra money toward principle. The term is also used to describe paying off the entire remaining balance of a loan in advance of the actual due date. Since long term loans require higher interest rates and cost you more over the length of the loan, you want to be able to pay down the principle balance on the loan as quickly as possible, and you don't want to pay a penalty for doing so. Any loan that charges a penalty for prepayment is likely not a great deal.
  • Choosing a Lender: A final consideration to make when comparing 72-month car loans is the quality of the lender. Do research online and in financial publications to find out the stability of the lenders you are considering. See if they have been around for a number of years and if they are solid and safe. You will want to know their reputation for making negative reports to credit bureaus and you'll want to consider how easy it is to make payments. Find out their record for customer service and see if they offer online payments and payments by phone.You could be in a relationship with this lender for 6 years, and you want to make sure you are happy with your financial partner.
  • See what kind of interest rates you can get >>

While 72 month car loans may not always be the ideal was to finance a car purchase, they can help car buyers who need to be able to make low monthly payments. With a little research and information, you can get the best terms and rates on a 72 month car loan to meet your specific needs.

Need a Car Loan?

It only takes a minute.
Comments