When an online dealer offers you a auto loan request to buy a car they need to worry about the risk that at some point you might stop paying back the loan. The lender essentially helps you to purchase the car in hope that you pay back the money.
Now let us think about a five-year loan and a seven-year loan from the perspective of a lender. When it is a seven-year loan a lender spends extra two years for the car with risk of defaults. This is another two years that you could stop paying back for any uncomfortable reason. Thus, the online lender charges a higher rate of interest on long-term loans.
For example, you buy a car of $15,000 and the lender offers you two different quotes. One is a five-year option with monthly payment of $301 at 5% and other seven-year with monthly payment of $241 at 7%. Which is the best deal?
The five-year has a huge monthly payment burden compared to a seven-year loan. However, that is not the end of the whole story. You will be paying be less in amount for a five-year loan compared to seven year, say around two thousand dollars more. Save those two thousand dollars and get out of the debts two years faster.