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  • Terry Banks

New Car Smell(y) (aka Car Debt)

I read an article recently that said that 72-month car loans are becoming the norm instead of 48-months. As someone who hasn’t had a car payment in years who is planning to drive my 2008 until the wheels fall off, I was flabbergasted. 72 months is 6 years! Imagine making payments on a “new” car while dealing with the maintenance issues of an older car. Ouch!

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I was curious about what the difference would be on a 48-month car loan and a 72-month car loan.


I was even more curious about the impact that high-interest rates have on those with less than stellar credit.


So, I compared a 48 vs 72 month car loan rates. Check out the calculator below to see the impact that time and interest rates have on a $20,000 car.

On the left is a 48-month car loan rate with an interest rate of 3.6% vs. 15.24%. On the right is the same rate comparison but with a 72-month car loan rate.



Purchasing a car based on monthly payments alone can be deceiving. The 4-year loan with the low-interest rate has a $448 monthly payment and the 6-year loan with the high-interest rate has a $425 monthly payment.

$10,637 of interest on a $20,000 car! In a nutshell, if you have bad credit and a 6 yr loan, at month 72 you just paid for 1.5 cars. So ask yourself, is a 72-month car loan bad? Some with not so good credit should be asking, is a 48-month car loan bad?



In many parts of the U.S. that 10k could have been a 3.5% down payment on a house using a first-time homeowner program. On average, folks in the U.S. are spending $37,782 on new cars compared to the 20k scenario above.


It definitely pays to have a good credit score if you need to borrow money for major purchases.


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