Same loan, different lengths
Borrowing $35,000 at 6.5%:
| Term | Monthly payment | Total interest |
|---|---|---|
| 36 months | $1,072.72 | $3,618 |
| 48 months | $830.02 | $4,841 |
| 60 months | $684.82 | $6,089 |
| 72 months | $588.35 | $7,361 |
| 84 months | $519.73 | $8,657 |
Going from 60 to 84 months saves about $165 a month but adds about $2,568 of interest.
Longer loans usually cost a higher rate too
The table uses one rate for every term to keep the comparison fair. In practice, lenders usually charge more for longer terms. At 6.0% over 48 months the interest is $4,455; at 7.5% over 84 months it is $10,095, more than double.
The negative equity problem
Cars lose value fastest in the first years. On a long loan the balance falls slowly, so you can spend years owing more than the car is worth. That matters if the car is written off or you need to sell. Check your own situation with the negative equity calculator.
A practical rule
- Choose the shortest term whose payment fits comfortably in your budget.
- If only a 72 or 84-month loan makes the payment work, consider a cheaper car or a bigger down payment. The down payment calculator shows how long that takes to save.
- If you take a long loan, plan to pay extra when you can. The pay off early calculator shows how much that saves.
Try it yourself
Open the car APR calculator and enter your own loan. It works in 13 currencies and follows each country’s loan rules.