Why Long-Term Car Loans Are Dangerous
Why long-term car loans are dangerous in the US—negative equity, more interest, and payment stretch so you avoid the trap.
Long-term car loans (e.g., 72–84 months) in the U.S. are dangerous because you pay more interest, stay in negative equity longer, and can get stuck if you need to sell or trade. Here's why long-term car loans are dangerous.
TL;DR Long-term loans = more total interest, slower equity build, longer period of negative equity (owe more than car is worth). If you need to sell or trade early, you may owe more than the car is worth. Use autopremo.com payment calculator and negative equity calculator. Use autopremo.com.More Total Interest
Longer term = more interest over the life of the loan. 72 months at 7% on $30K ≈ $7,100 interest vs 36 months ≈ $3,300. Use autopremo.com payment calculator to see total interest. Get your numbers at autopremo.com.
Negative Equity Longer
Cars depreciate fast early on. With a long term, you pay down principal slowly—so you owe more than the car is worth for longer. If you need to sell or trade, you may have to roll negative equity into the next loan. Use autopremo.com negative equity calculator and depreciation calculator. See negative equity at autopremo.com.
Payment Stretch Trap
Dealer may stretch term to "fit" your payment—you get a car you can't afford on a shorter term. You pay more interest and stay underwater longer. Agree on OTD first; choose the shortest term you can afford. Use autopremo.com. Check at autopremo.com.
Bottom Line
Long-term car loans = more interest, longer negative equity, payment stretch trap. Use autopremo.com payment calculator and negative equity calculator so you avoid the danger.