60 Month Used Car Loans: 2 Pros and Cons

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January 27, 2012

Having a 60 month used car loan has both its pros and cons. The advantage of longer term loans is that you have longer to pay, and get a lower monthly payment. On the other hand, you may be paying less per month, but you will be paying much more than the original principal when compared to a shorter term loan like a 36 or 48 month loan. 60 month car loans are attractive options for those who want to buy a nice used car, but may not have all the money to spend right now. Five years is a long time to pay it off, so if you have a budget, it is definitely something to look for. 


Monthly Payments

The biggest advantage of 60-month car loans is that you have five years to pay them off. Because of this, your monthly payments will be much lower than if you have a three or four year loan. More time equals more time to pay. The benefit is that you can potentially buy a more expensive car since the payments won't be astronomical. Certified pre-owned used cars are more expensive than regular used car and may be what you have your eye on. If you buy a $10,000 used car, it is easier to pay that off in three years compared to five years. When you are looking at $30,000 plus for a certified pre-owned car, the more time to pay it off may be advantageous and enable you to get a car you never thought you could afford.


When you lock in your five year loan, you can always refinance it in the future. If the interest rates change for the better, it is a great option to refinance. Things could be going bad and you may need more time, so you can also refinance so that you can lower the monthly payments over another extended period of time.



The interest rates on a longer loan are usually a bit more than a shorter loan. As a way to account for the long wait the car loan lender has to go through to get their money back, they charge more in interest. Coupled with that, since the loan is over 60 months, they are going to get 60 months of interest. That is a ton of free money you are sending over to the car loan lender when it could be in your pocket, or being used for other things. 


Cars depreciate a lot over their life span. The highest is in the first year, however, used cars still depreciate. If you lock in a five year loan, your car may be worth X now, but in three or four years, your amount remaining on the car might be more than the car's value. You would be throwing money away then. Also, many people don't drive their cars for more than five years, so you may want a change of scenery when it comes to your car. 

Overall, there are both positives and negatives when it comes to 60 month used car loans.


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