Vehicle Economics48 vs 60 Month Auto Loan
Compare a 4-year and a 5-year loan on the same financing, payment against total interest.
Why this comes up
48 and 60 months are both common near-term financing choices, close enough that the decision often comes down to "how much does the shorter term actually cost me in payment, and how much do I save in interest." A dealer or lender will usually quote both without volunteering the total-interest gap between them, since the shorter term's higher monthly payment is the harder sell. At the same principal and rate, the 48-month loan is always cheaper in total interest, the real question is whether the higher payment fits your budget and whether the interest savings are worth giving up that monthly breathing room.
How we calculated this
Each term uses the standard fixed-rate amortization formula at the same loan amount and APR, run as a full monthly schedule so we can report total interest, not just the payment. We also report the 60-month loan's remaining balance at month 48, the point where the shorter loan would already be paid off, since that balance is the clearest way to see how much later the longer term reaches full ownership.
Worked example, using this page's own defaults ($22,000 at 6% APR): the 48-month payment comes out higher than the 60-month payment, but the 48-month loan pays meaningfully less total interest. Run the calculator above to check the exact figures against your own numbers.
What this means
- The interest gap between these two terms grows with the loan amount and APR, on a larger loan or a higher rate, the same 12-month difference in term costs meaningfully more.
- A shorter term reaches positive equity sooner almost by definition, since more of each payment goes to principal from the start, which matters if you might trade or sell before the loan is paid off.
- If the 48-month payment doesn't fit your budget at all, this comparison alone won't fix that, see Maximum Car Price From Monthly Budget to check what price actually supports a payment you can sustain.
Limitations
This is a planning model, not a lender's payoff quote, and assumes the same APR at both terms; some lenders price shorter terms slightly differently, and a promotional rate is sometimes only available at one specific term. Confirm both actual quoted rates before deciding based on this comparison alone. See Methodology.
Methodology
This engine is built on Vehicle Economics' fixed-rate amortization model: the standard loan-payment formula run out as a full month-by-month schedule. See Methodology for the full detail.