Your car loan term is the length of time you have to repay the loan. The average car loan term is close to six years, but a wide range of terms are available.
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One choice you’ll have to make when getting a loan for a new or used car is how long you want to pay for it. You have a certain amount of time to pay back the loan on a car. This has an impact on your monthly payment and the total amount of interest you pay.
The most common car loan terms are 24, 36, 48, 60, 72 and 84 months, but some lenders also offer 12-month and 96-month car loans. While car loan terms are usually in 12-month increments, there are lenders willing to offer other options if needed by a borrower.
According to consumer credit reporting company Experian, the average auto loan term in the first quarter of 2025 was 68.63 months for new cars and 67.22 months for used cars. The average car lease was 35.87 months.
A car loan’s length, also called the financing term, is one of the most important things that affects your budget when you’re shopping for a new or used car. Your monthly payment and the total amount of interest you’ll pay over the life of the loan will all depend on the length of the loan.
In this article we’ll take a closer look at average car loan lengths term options, and what to consider when choosing an auto financing term.
What is the Average Car Loan Term?
According to consumer credit reporting company Experian, the average new car loan term in the first quarter of 2022 was 68.63 months – almost 5 years and 9 months. For used cars, the average loan length was slightly shorter at 67.22 months – around 5 years and 7 months.
Edmunds recommends keeping auto loans to no more than 60 months (5 years) for new cars and 36 months (3 years) for used cars. However, data shows loans are getting longer, which we’ll explore more below.
Car Loan Term Options
The most common car loan terms are 24, 36, 48, 60, 72 and 84 months from a lender. However, some lenders offer more flexibility with 12, 96 or even longer terms if needed by the borrower.
Here’s a quick rundown of the most popular auto financing term options:
- 12 months – Best for buyers with excellent credit and the cash to pay off quickly. Results in lower total interest costs.
- 24 months – Also works well for buyers who can pay off faster. Provides lower interest charges than longer terms.
- 36 months – The Edmunds recommended maximum term for used cars. A good balance of affordable payments and interest costs.
- 48 months – A moderate term that keeps interest costs reasonable on pricier new cars.
- 60 months – The Edmunds recommended maximum term for new cars. Allows buyers to keep payments manageable.
- 72 months – Growing in popularity, but results in paying more interest over a longer period.
- 84 months – The longest common term, but leads to much higher interest charges overall.
The Average Car Loan Is Getting Longer
It’s clear that longer car loan terms are becoming more popular. Edmunds data shows that 84-month loans hit an all-time high in the first quarter of 2022, making up 19.8% of new car financing. That’s up from 15.8% in the first quarter of 2021.
Short-term loans (less than 48 months) dropped to just 10 2% of new car loans in early 202022, which is less than in 2011. 9% the year before.
The trend is similar for used cars. The average used car loan length in Q1 2022 was about 70 months – nearly 6 years. People are financing used vehicles for about the same amount of time as new cars, even though loan amounts are lower by $10,000 on average.
Why Are Buyers Opting for Longer Car Loans?
There are a few key reasons longer car loan terms are gaining favor:
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Bigger Loans—The average price of a new car has steadily gone up and is now over $41,000 in 2022. Longer terms let you pay back big loans over a longer period of time, which lowers your monthly payment.
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Higher Interest Rates – Auto loan APRs are up to around 7% for new cars and 8% for used cars in 2022. Longer terms offset higher rates to prevent payments from ballooning.
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Trucks & SUVs – 38% of new vehicles sold are now trucks and SUVs with higher prices that buyers finance over longer periods to manage payments.
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Economic Pressures: Inflation and other factors make people look for lower monthly payments and longer loan terms in order to buy cars on a tight budget.
The Pros and Cons of Long Car Loans
Extended car loan terms can make automotive purchases possible, but they also come with drawbacks to consider:
Pros:
- Lower monthly payments
- Buy more expensive vehicles
- Offset higher interest rates
- Improve chances of approval with bad credit
Cons:
- Pay more interest over the loan life
- Slower to build equity in the vehicle
- Increased risk of negative equity
- Older car with less resale value when loan ends
Overall, the consensus is lengthy auto loans mean paying significantly more interest. But in today’s market, they may be the only real option for some buyers.
Tips for Picking the Best Car Loan Term
If faced with a long car loan, focus on keeping the term to 5 years or less when possible. Also aim to:
- Make a sizable down payment of 15-20% to lower the loan amount
- Shop interest rates from multiple lenders
- Choose the shortest term you can afford comfortably
- Accelerate payments to pay down principal faster
- Make extra principal payments when possible
Running car loan calculations with different terms is also essential. This allows you to estimate and compare total interest costs over time.
While longer financing periods have risks, they make vehicles accessible for more consumers in today’s challenging auto market. The key is going in eyes wide open by weighing the pros, cons and true costs involved.
What to consider when choosing a car loan term
Often, car buyers focus mainly on a car loan’s monthly payment. Making sure you can afford the payment each month is important, but so is weighing that against other factors like the total amount of interest you’ll pay.
The following example shows the difference loan term makes when comparing the same car loan — a $35,000 loan with 9% APR and no down payment. It doesn’t reflect the fact that usually the rate increases the longer your term goes.
How loan term affects your car payment
The longer you stretch out an auto loan, the lower the monthly payment will be. Since the full loan amount is spread over a longer period of time, it’s divided into smaller loan payments. There can be positive aspects for both long-term and short-term auto loans.
Choosing a longer auto loan term with lower payments might enable you to buy a more reliable car at a higher price. It could also make it possible to qualify for a car loan that will help you establish or rebuild credit—as long as you make the payments on time.
Also, if you’re in a financial position to afford the higher payments of a shorter-term car loan, and you go that direction, there are benefits. Along with saving on interest costs, paying off the loan in a shorter time frame might give you a break from car payments before taking out another auto loan.
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FAQ
Is a 72-month car loan too long?
Because of the higher interest rates and risk of going upside down, most experts agree that a 72-month loan isn’t ideal.
How much is a $30,000 car payment for 60 months?
Depending on the interest rate, a $30,000 car loan with 60 months will cost between $500 and $700 a month. For example, at a 5. 8% interest rate, the monthly payment would be around $520, according to Edmunds.
Is $500 a month too much for a car?
So essentially yes $500 a month car payments is perfectly normal.
What is a good length for a car loan?
NerdWallet typically recommends keeping auto loans to no more than 60 months for new cars and 36 months for used cars — although that can be a challenge for some people in today’s market with high car prices. Ultimately, choosing the best auto loan term depends on balancing cost, affordability and your specific needs. Jun 5, 2025.