How Long Is The Repayment Term For A Car Loan? | Complete Guide

ln this post Repayment Term For A Car Loan. If you’re buying a car, you might need to take out a car loan to pay for it. The term of auto loans varies depending on the borrower’s requirements.

Many motorists use a car loan to finance a new or used vehicle. However, you must first determine how much money you need to borrow and how long you want the loan to last before applying for a loan. Your loan’s term will have an effect on factors like your interest rate and monthly payment.

Repayment Term For A Car Loan

There isn’t a “average” period for a car loan, although you can usually choose to pay it off in between 24 and 84 months. The best loan term for you will depend on your unique circumstances. When selecting a vehicle loan length, take into account the following.

How Long Is a Normal Car Loan?

The typical length of a car loan is hard to pin down. Loan durations of three to five years, however, are very typical. The loan terms you are eligible for will determine the interest rate and monthly payment schedule for loans throughout this time period.

The majority of vehicle loans come in 12-month increments. Typically, you may find lenders who offer loans with durations of 24, 36, 48, 60, 72, and 84 months. However, some lenders also offer loans with longer and shorter durations.

Reasons to Choose a Longer Loan Term

To lock in a low monthly payment, a lengthy loan term is typically preferred. Each payment is smaller even though they are made over a longer period of time.

Consider that you had a five-year, 3% APR loan for a $30,000 car with no down payment and no sales tax. Approximately $539 per month would be spent on payments. Instead, if you choose a seven-year loan, your monthly payments would be $396. Your monthly budget may be significantly impacted by this $143 difference.

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Even if a loan with a longer term may be more cheap, keep in mind that you may end up paying more in interest. Before choosing a loan, it’s a good idea to examine the interest payments on long-term and short-term loans.

Negative Equity and Long Car Loans

A car loses value the longer you own it and the more miles you put on it. Any time an automobile is loaned, its value decreases. Long-term loans, however, may potentially result in you paying more for your car than it is worth.

A long-term car loan raises your chance of having negative equity in the car, which occurs when your debt exceeds the value of the car. Being “underwater” or “upside down” on your debt are other terms for it. Repayment Term For A Car Loan

While negative equity isn’t always a bad thing, there are certain drawbacks, especially when it comes to selling or trading in your car. It can be quite challenging to sell or trade in a car with negative equity if you haven’t paid off the loan.

Possibilities exist to prevent negative equity, such as increasing the down payment. To avoid it, though, you might select a shorter loan term.

How to Get a Lower Monthly Loan Payment

Even if you choose a long-term loan, monthly car payments can be very expensive. Regardless of the length of the loan, using these techniques can help you lock in a lesser monthly payment.

Set a sizable down payment: A significant down payment lowers the amount you must borrow, which might allow you to negotiate a cheaper monthly payment. You can also prevent having negative equity.

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Improve your credit score: Working to raise your credit score will help you acquire the finest loan terms. Borrowers with strong credit are more likely to receive cheaper interest rates from lenders.

Lease instead of buy: For some drivers, leasing a vehicle can be a more cost-effective and risk-free solution. Some leases allow you to drive a brand-new or nearly-new car while having monthly payments that are cheaper than those of auto loans. After the lease time is over, you also have the choice to purchase the vehicle.

How old of a car can I finance for 72 months?

Even if you have good credit, a bank typically won’t finance a car that is more than ten years old. Even with a new automobile, it could be challenging to get financing through a bank if your credit isn’t fantastic. But when it comes to auto lending, banks are by no means the only choice.

How long does it take to pay off a $30,000 car?

Your monthly payment would be about $700 with a loan amount of $30,000, an interest rate of 8%, and a 60-month repayment period. Be sure to set aside money for auto repairs, gas, and insurance before you buy your new vehicle.

How old of a car can I finance for 60 months?

Generally speaking, even if you have good credit, a bank  won’t finance a car that is more than ten years old.

Faqs About Repayment Term For A Car Loan

How long does it take to pay off a car loan?

Presently, a loan with a length of 72 months is the most popular, with an 84-month loan not too far behind. In reality, more than 73% of brand-new auto loans had terms greater than 60 months in the first quarter of 2022, up over 33 percentage points from the same period in 2010.

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How long are most car loan terms?

The most typical car loan duration is 36 months (three years) four years (four years) 30 years (five years)

Can you pay off car loan early?

Some lenders impose fines when a car loan is repaid early. The interest you pay on your loan each month is how the lender generates revenue. There may be an early prepayment fee if you repay a loan early, but you typically won’t pay any additional interest.

How much would monthly payments be on a 20000 car?

A $20000 auto loan’s monthly payment is mostly determined by the loan term, or the length of time it takes to be repaid, and the APR (Annual Percentage Rate). For instance, the monthly payment would be about $591 if the loan duration was 36 months and the APR was 4.12%. The monthly payment drops to $452 if the loan is taken out for 48 months.


In the end, determining the ideal vehicle loan term for you is down to you and your financial condition. Take advantage of the chance to get a short-term auto loan if you can.  For borrowers looking for the shortest loans feasible to purchase the cars of their dreams.

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