Why 72 Months Auto Loans Are Preferred

The term of the auto loans holds major significance for the borrowers as this decides whether the monthly payments are going to be low or high. Usually, the term of the loan works good with the amount of the loan which means that a high amount should come with a high term otherwise the monthly installments would be impossible to pay. Many lenders advertise their loans as 72 month auto loans or 84 month because several borrowers wish for long term loans in which they can pay off the amount easily. The following example can shed some light on the amount of money that the borrower would save when going for a long term loan.

For example, let the amount of the loan, including the car price and all services be equal to 16000 dollars. Now, let the normal loan term for this amount be four years and the interest charged be 10 percent. The borrower has to pay back 4000 dollars a year per interest for a time period of four years. However, if the term of the loan is six years or seven years and the interest rate charged is 12-13 percent (interest is slightly higher in case of high term loans), then the borrower has to pay back 2666 dollars a year or 2260 dollars a year.

The interest rate isn’t added in the aforementioned calculations. By adding the interest, the amount to be paid back becomes 5600 dollars a year for four year term. For a six year term, the added interest makes the amount to be paid around 4200 dollars a year and for the seven year term, it comes out to be 3900 dollars a year. Hence, it can be easily said that going for a longer term means more money saved every month on auto loans installments.

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