How Loan Term Affects Your Total Car Loan Cost
A side-by-side comparison of 36, 48, 60, and 72 month auto loan terms on the same loan amount, and why a longer term costs much more in total interest.
Loan term is one of the biggest levers on both your monthly payment and your total cost — and the two move in opposite directions as the term changes.
Side-by-side on a $24,000 loan at 5.5% APR
| Term | Monthly payment | Total interest paid |
|---|---|---|
| 36 months | $724.70 | $2,089.26 |
| 48 months | $558.16 | $2,791.46 |
| 60 months | $458.43 | $3,505.67 |
| 72 months | $392.11 | $4,231.87 |
Going from 36 to 72 months roughly halves the monthly payment, but about doubles the total interest paid — from $2,089.26 to $4,231.87 — because you're paying interest on a large balance for twice as long.
The "underwater" risk of long terms
Cars depreciate quickly, especially in the first few years, while a long loan term pays down principal slowly in its early months (since more of each payment goes to interest early on). Combining those two facts means a 72- or 84-month loan can leave you owing more than the car is worth for a long stretch of the loan — a real problem if you need to sell or trade in before the loan is paid off.
How to choose a term
Pick the shortest term whose monthly payment comfortably fits your budget, rather than the longest term available to minimize the monthly number — the calculator's total interest and total cost figures make the real tradeoff visible before you sign.
Compare any two terms on your own loan amount using the Auto Loan Calculator.