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When to Avoid 72-Month Auto Loans

72-month auto loans or six year financing refers to a loan in which the money has to be returned over the course of six years. Usually these kinds of loans are advertised because of their loan term as most lending institutions don’t prefer such a high term. However, there are several reasons why an applicant shouldn’t prefer such a high term for their loan. Although these auto loans come with the benefit of a long term, it also means that the title of the car won’t be transferred that much sooner. This means that the borrower has to ride a car for six years without even owning it.

Another disadvantage is that most people don’t like to drive a single car for six continuous years. This means that the car cannot be sold as the car isn’t the borrower’s to sell. Moreover, by the time the term is over, the equity on the car would be negative in case it is traded. Hence, one should always go for a longer term when he/she is sure that he/she can run the car without grudges for more than six years. One major disadvantage is with the interest rate charged on the loan. As the term is quite high, it significantly reduces the monthly installment. However, the lenders usually charge high interest on these cars and the applicant agrees because the term is high.

However, due to the high rate of interest, the borrower ends up paying a lot of money over the course of the loan and it usually runs into thousands of dollars. Even with a decent interest rate like 10 percent, the borrower is paying sixty percent of the car money extra to the lender over the term of the loan. Hence, one should always consider whether the interest can be afforded for six years and whether they can ride a single car for 72 months.

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