60 vs 72 months: what you're really choosing

Adding 12 months spreads principal over more payments, so each payment shrinks. But you pay interest for a year longer on a balance that declines more slowly — and if the lender prices the longer term higher, the gap widens.

Method

Both loans use the standard amortization formula Payment = P × r ÷ (1 − (1 + r)^−n). Total interest is Payment × n − P. The remaining balance of the longer loan is computed at the month the shorter loan ends.

Worked example

Borrowing $35,000: at 7% for 60 months the payment is about $693 with $6,583 interest. At 7.5% for 72 months it is about $605 with $8,571 interest. The longer loan saves $88 a month but costs $1,989 more and still owes $6,975 at month 60.

When the longer term carries more risk

• If you might sell or trade within a few years, a slower-falling balance makes negative equity more likely. The negative equity calculator shows what rolling it over costs.
• The conventional 20/4/10 rule of thumb suggests 48 months or less — a guideline, not a requirement.
• If the lower payment is what makes a car fit your budget, revisit the price range with the affordability calculator.

Limitations

Real quotes may include fees, add-ons or different first-payment dates. Use this to compare structures, then confirm figures on each lender's disclosure.