<prompt> Human: So I have a question and I hope I can get an answer.I purchased a used vehicle back in 2015. I know I wanted my monthly payments to be below 200, but it wasnt possible to do that without doing a 5 year loan. TBH, I wanted the flexibility to be able to put down more than what I owed my monthly payment is around 160 and I pay 250 a month without the financial responsibility of coming up with a higher monthly payment. I asked if there would be a penalty for paying it early and I was told there would not be. I got a great interest at about 3.5 and to date, Ive only paid about 300 in interest. The car will be paid off in about a year.My question is why would anyone want to elect for a 3 year loan when the interest rate for a 5 year loan is the same and there is no penalty for paying it early?  <response>: Shorter loans usually have a lower interest rate. Ive generally been told that if you cant afford the 4 year loan you cant afford the car. Simply put longer term loans allow you to pay less monthly while paying a lot more overall. Ideally you take out the shortest term loan you can in terms of amount you spend.unless interest is really low and you invest the money you dont spend on the car every month 