Think that car payment would be a little more affordable if you could just spread those payments over another year or two?

If you do, you're not alone. Eighty-nine percent of new car buyers are financing their vehicles for more than four years, and 55 percent select loans that extend more than five years, according to a 2006 study commissioned by the Consumer Bankers Association and conducted by BenchMark Consulting International.

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"Cars are made better, they are more expensive and people are keeping them longer," says Carter Myers, president of Carter Myers Automotive, a group of Virginia-based dealerships, past chairman of the National Automobile Dealers Association and chairman of Automotive Retailing Today, an industry association of manufacturers and dealers.

Given those circumstances, "it's natural" that the loan cycle would lengthen, he says.

With used cars, 82 percent of buyers finance for more than four years, and 40 percent opt for payments to run more than five years, according to the study.

A good idea?
So are longer loans good for the consumer?

"It has allowed consumers to buy more car than they had in the past," says Marguerite Watanabe, auto finance practice manager for BenchMark, a management consulting firm.

Twenty years ago, when consumers shopped for a car, they focused on the cost of the car, she says. Today, they shop payments. "The monthly payment is now what's driving the purchase."

Whether it's a good move for an individual consumer may depend on how he or she handles the loan, says Philip Reed, consumer service advice editor for Edmunds.com.

Longer payoffs don't offer the buyer a lot of positives, Reed says. Virtually the only upside is that "you can afford a car you couldn't otherwise afford," he says.

A long-term loan delays ownership, even as the car is decreasing in value, Reed says. Typically, cars drop in value about 20 percent when the first owner drives them off the lot. Between years two and five, they plateau, losing value gradually. After year five, value "begins dropping off more steeply" for most cars, he says.

There are ways for consumers to benefit from longer-loan terms, Reed says.

He recently took out a five-year loan on a new car with the goal of paying extra every month and getting the note paid in three years. The longer term gives him the flexibility of a lower minimum payment and he gets to decide just how much more money he puts toward the payment every month.

"If you're fairly disciplined, you can make larger payments and pay it off early," Reed says.

To calculate whether a longer term loan is the right move for you (and your car), you want to look at how you use a car, how often you trade, plus the resale record of the specific make and model. In addition, just how much money do you realistically plan to put toward a car payment every month?

The typical long-term loan buyer is "more likely someone who expects to drive the car for a long time," says Paul Taylor, chief economist for the National Association of Automobile Dealers. It's also more typical for select or "cult" cars that either appreciate or don't lose value in the usual manner.

For the regular buyer and the regular car, a long-term loan is "out of sync with the typical ownership cycle," Taylor says. People tend to keep a vehicle about 4.8 to 5.5 years, he says. Typically, they sell it about three months before the loan is paid, he says.

Some consumers may also be using longer loan terms to get into cars they might not be able to otherwise afford. If you've got your heart set on a luxury sedan and, after the down payment, need to finance $30,000, a three-year loan at 3 percent will cost you $872 per month. If you could pay it over seven years at 6 percent, the payment drops to $497. But don't forget, it also adds $4,340 (in interest) to the cost of the car.

Always think long term. If a longer finance cycle means that you'll also be keeping the car during the period when you can also expect more expensive repairs or service visits, or past the point when it would have substantial trade-in value, then that lower monthly payment may end up costing more than you bargained.

Real-life math
Being able to drive that dream car involves more than just making the monthly payment. You want to make a smart decision on both the car and the financing.

First, look at the basic costs. Just how much would the monthly payment differ if you financed your car over five or six years instead of two, three or four?

Dealers can typically offer from zero percent to 6 percent, depending on your credit and the length of the loan, says Taylor. Typically, the longer the loan, the higher the rate.

"Obviously, if you're going to pay it off over a longer period of time, it will cost you more," says Deanna Sclar, author of "Buying a Car for Dummies." So look at what those dollars could have earned you elsewhere. If you hadn't put the money into the car, and instead parked it in your investment or savings account, what would that have earned?

"You have to look at what your money can buy you," Sclar says.

The smart rule of thumb? Spend no more than 20 percent of household income on auto payments, says Reed. By that measure, most people really can't afford the cars they're driving, he says.

Next, look at how you want to use the car and for how long. Many experts recommend setting the loan term to coincide with when you probably want to trade the vehicle (and even giving yourself a few payment-free months to assemble a down payment.) If you typically like to trade a car every three or four years, how would a five- or six-year loan change your plans?

"Certainly a longer loan does make it more difficult to trade early," says Myers.

How will having an older car impact your next trade-in deal? Typically, a well-maintained six-year-old model will fetch considerably less than a three-year-old version of the same vehicle.

Another point to keep in mind: Sometimes predicting the future worth of an auto can be a gamble. Future value is based on predicted demand, and what is in demand can change very quickly. "You can't always figure that out," says Reed.

Case in point: sport utility vehicles. While they may seem to make up every other vehicle on the road, demand for SUVs has dropped since the price of gas started creeping toward and past $3 a gallon, says Reed. As a result, the trade-in and resale value once predicted for many models several years ago has changed, he says.

What will it cost you?
You also want to look at the repair costs that you'll rack up during those extra years. Based on what you know about the make and model, what kind of repair bills should you expect during the additional years you'll have the car? Can you afford those bills in addition to the monthly payments?

One good thing: Warranties on cars have gotten longer, too, says Myers.

Check out any service contract or extended warranty the seller might offer to see if it would cover or offset any of the garage bills you could expect during those extra few years of ownership.

Then just do the math. When you figure out how much extra you stand to pay in interest, try to also tally up if or how the value of the car would change if you keep it a few more years. If you plan on using the car as a trade-in, what will those extra few years in age cost you when you go to buy your next car? And what, if anything, would you be earning with any of that extra money you might be paying?

From a more practical standpoint, what choices do you have if your life changes (moves, marriage, career change, baby, new commute, etc.), and the old car is no longer the right car?

Try to keep your options open. If you put at least 20 percent down, you've covered that first year of steep depreciation and should never be upside down in your loan and owe more than the car is actually worth, says Reed (which can make it difficult to sell or trade the vehicle). In some situations, you may even want to consider refinancing, he says.

Don't forget to add in the boredom factor. Sure, you love the car now, but how will you feel about it when it's three years old and you're only halfway through the payment book?

Most of all, realize that this vehicle is one of many that you will own, and it's something that will affect your finances for the period of time you own it, so plan accordingly.

Says Reed, "It's a good idea for people to look at auto expenses as a cycle and not a one-time shot."