Hi guyz, how are you. I hope you are fine and doing good in your life. As you know that many people finance their new or used vehicles with a car loan.
Before applying, it’s important to you to determine how much you need to borrow and the desired loan term. So, the length of the loan will affect factors like your interest rate and monthly payments.
Although there isn’t a best car loan length, options typically range from 24 to 84 months. The best term for you depends on your financial situation. Here’s what to keep in mind when selecting an auto loan term.
Car loan terms typically range from 24 to 84 months, with common options including 24, 36, 48, 60, 72, and 84 months.
Some lenders may also offer terms as short as 12 months or as long as 96 months, often in 12-month increments. Certain lenders can provide alternative options to meet specific borrower needs.
According to study, a leading consumer credit reporting agency, the average auto loan term in the third quarter of 2025 was approximately 65.6 months for new vehicles and 67.2 months for used vehicles. The average car lease term was about 34.4 months.
What is the normal car loan length?
Car loan terms typically range from 24 to 84 months, and the best option for you depends on your financial situation.
While the average loan length can vary, terms of three to five years are common. These terms often offer a balance of manageable interest rates and monthly payments, but the final terms will depend on what you qualify for.
Opting for a long-term car loan increases the risk of owing more on the car than it’s worth, a situation called negative equity or being ‘upside down’ on the loan.
What to consider when choosing a car loan term?
It’s common for buyers to focus primarily on the monthly payment. While it’s important to ensure the payment fits your budget, it’s equally important to consider other factors, such as the total interest you’ll pay over the life of the loan.
For example, let’s look at a $32,000 loan with a 9% APR and no down payment. This illustrates how the loan term impacts the overall cost, though it’s worth noting that interest rates can increase with longer loan terms.
Why Choose a Longer Loan Term?
The main reason to choose a longer loan term is to get a lower monthly payment. Even though the loan lasts longer, each payment will be smaller.
Although a longer loan term may lower your monthly payments, it can result in higher interest costs. It’s important to compare the total interest payments between a long-term and short-term loan before making a decision.
Read more: How You Can Get Military Auto Loans With Bad Credit
Average Car Loan Lengths:
| Credit Score Tier | Average Loan Term (Months) Q2 2023 | Average Loan Term (Months) Q2 2024 | Average Loan Term (Months) Q2 2025 | Change per |
|---|---|---|---|---|
| Excellent (720-850) | 62 | 63 | 64 | +1 |
| Good (690-719) | 64 | 66 | 67 | +3 |
| Fair (630-689) | 67 | 69 | 70 | +3 |
| Poor (300-629) | 71 | 73 | 74 | +3 |
Expert Recommendations
Financial experts generally recommend a best car loan length of 48 to 60 months for most buyers. This range strikes a balance between manageable monthly payments and reasonable interest costs. While longer terms can be tempting, especially for expensive vehicles, they often result in higher overall costs and increased financial risk.
Read more: Average Car Loan Interest Rate For 730 to 800 Credit Score in 2025
Typical Car Loan Lengths
Typically the best car loan length range from 24 to 84 months, with 36, 48, 60, and 72-month terms being the most common. Each option comes with its own advantages:
- Short-Term Loans (24-36 months):
- Pros:
- Lower overall interest costs.
- Faster equity build-up in the vehicle.
- Cons:
- Higher monthly payments.
- May strain budgets for buyers with limited income.
- Pros:
- Medium-Term Loans (48-60 months):
- Pros:
- Balanced monthly payments.
- Moderate interest costs.
- Cons:
- Slightly higher total interest compared to short-term loans.
- Pros:
- Long-Term Loans (72-84 months):
- Pros:
- Lower monthly payments.
- Easier to afford more expensive vehicles.
- Cons:
- Higher total interest costs.
- Slower equity growth, increasing the risk of being “upside down” on the loan (owing more than the car’s value).
- Pros:
How to Get a Lower Monthly Loan Payment?
Car payments can be high, even with a long-term loan. Here are some ways to lower your monthly payment, no matter what loan term you choose:
- Make a larger down payment: The more you pay upfront, the less you need to borrow. This can result in a lower monthly payment and helps you avoid owing more than the car’s value.
- Improve your credit score: A better credit score can help you qualify for lower interest rates, leading to lower monthly payments.
- Consider leasing instead of buying: Leasing a car can be a more affordable option for some people, with lower monthly payments than an auto loan. It also allows you to drive a newer car and gives you the option to buy the car at the end of the lease.
How to Choose the Right Auto Loan Term for You?
Your loan term greatly impacts the overall cost of the car loan. While longer terms lower monthly payments, they often lead to paying more interest overall.
If you find yourself needing more than 72 months to afford the payments, it might be worth reconsidering the car you can afford.
To make a shorter loan term work for you:
- Consider a used vehicle: New cars lose value quickly in the first year. Opting for a car that’s one or two years old can save you money and make a shorter loan term more manageable.
- Make a larger down payment: Increasing your down payment by 5-10% reduces the amount you need to borrow, making shorter loan terms more affordable.
- Shop around for the best deal: Before visiting dealerships, get prequalified with multiple lenders to see your potential loan options. Prequalification won’t affect your credit score, but preapproval requires more details and a hard inquiry, which may slightly lower your score. To minimize this, apply for preapprovals within a 14-day window.
FAQ’s
Q1. What is the best length of loan for a car?
The ideal car loan term is typically under 60 months. Experts advise against loans longer than 72 months due to high interest rates and the risk of owing more than the car’s value. A shorter loan term usually offers a better interest rate and reduces the likelihood of negative equity.
Q2. What is the average term for car?
The average car loan term is approximately six years, or around 72 months. However, a variety of loan terms are available, ranging from shorter options to longer ones. It’s important to choose a term that fits your financial situation, balancing monthly payments with the overall cost of the loan. Additionally, many loan products featured on financial websites may come from advertising partners who may compensate the site based on user actions or clicks.