What is the longest you should finance a car? (2024)

What is the longest you should finance a car?

Generally speaking, the longer you finance, the more interest you will have to pay. Many experts recommend a five-year loan or less if you can make it work. While a longer term might get you a lower monthly payment, your cost to own the vehicle will likely be higher based on interest paid over a longer length of time.

How long should you finance a car?

Even though the majority of car buyers are going with long-term car loans, is an auto loan of 72 months or more a good idea for you? NerdWallet recommends financing new cars for no more than 60 months and used cars for no more than 36 months.

What's the longest you can finance a car for?

The bottom line

While you can finance a car for up to 96 months, how long you finance a car really depends on your unique needs, wants and cash flow. Some shoppers opt for a shorter loan term that comes with higher monthly payments and reduces the total cost of the loan.

What is the best term length for car finance?

You can finance your car for as little as a few months to more than 84 months—or seven years. The most common length is 72 months—or six years—followed by 84 months. The longer your loan term, the lower your monthly payments, but the higher the overall interest.

Is 7 years too long to finance a car?

An 84-month auto loan can mean lower monthly payments than you'd get with a shorter-term loan. But having as long as seven years to pay off your car isn't necessarily a good idea. You can find a number of lenders that offer auto loans over an 84-month period — and some for even longer.

Is 60 month financing a good idea?

Higher interest rates are another reason to stick with a 60-month loan. The longer the term, the more interest you will pay on the loan, both in terms of the rate itself and the finance charges over time.

Is 72 months too long for a car loan?

72-month car loans are also riskier if you expect to purchase a different car before the six years are up. Depending on your car's condition and the demand for your car's make and model, you could sell this car during the loan for less than the outstanding balance, a situation known as negative equity.

Is it better to finance a car longer?

A longer loan term means you'll get a lower monthly payment, but you'll also pay more in interest. A shorter loan term is better, as it helps minimize borrowing costs and the risk of being upside-down on your loan.

Is 84 months too long to finance a car?

In most cases, getting an 84-month car loan isn't the best option. While a long-term loan can keep your monthly payments low, these loans are often more expensive over time due to interest fees.

What are the disadvantages of a large down payment on a car?

What are the disadvantages of a large down payment? Providing more money down doesn't guarantee a lower interest rate, and it can cut into your savings.

How long is the average car payment?

For a long time, three- or five-year car loans were the norm. But more and more people are choosing longer-term auto loans. In the fourth quarter of 2021, the average loan term for new-car loans was nearly 70 months, according to the Q4 2021 Experian State of the Automotive Finance Market report.

Can I pay off a car loan early?

The lender makes money from the interest you pay on your loan each month. Repaying a loan early usually means you won't pay any more interest, but there could be an early prepayment fee. The cost of those fees may be more than the interest you'll pay over the rest of the loan.

How much should your car cost?

How much car can I afford based on salary? According to our research, you shouldn't spend more than 10% to 15% of your net monthly income on car payments. Your total vehicle costs, including loan payments and insurance, should total no more than 20%.

How to pay off a 7 year car loan in 3 years?

What is a good interest rate for a car for 72 months?

An interest rate under 5% is a great rate for a 72-month auto loan. However, the best loan offers are only available to borrowers who have the best credit scores and payment histories.

How much is a 30 000 car loan?

Calculator Results

A $30,000 auto loan balance with an average interest rate of 5.0% paid over a 6 year term will have a monthly payment of $483. In total, the loan will cost $34,787 with $4,787 in interest.

Is it better to finance 60 or 72 months?

Is a 72-month car loan worth it? Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go.

How much is $20,000 financed for 60 months?

For instance, using our loan calculator, if you buy a $20,000 vehicle at 5% APR for 60 months the monthly payment would be $377.42 and you would pay $2,645.48 in interest.

How much downpayment should I put on a car?

How much should you put down on a car? One rule of thumb for a down payment on a car is at least 20% of the car's price for new cars and 10% for used — and more if you can afford it. These common recommendations have to do with the car's depreciation and how car loans work.

What is the oldest car a bank will finance?

Typically, a bank won't finance any vehicle older than ten years, even if a borrower has good credit.

How do I pay off a 6 year car loan in 3 years?

Is 6 years too long to pay off a car?

How long is too long for a car loan? Many experts believe that once an auto loan passes five years (60 months), the benefits of the longer term are outweighed by potential problems, so that means any loan that lasts for more than five years would be a long-term auto loan.

Is it financially smart to finance a car?

An auto loan can benefit you because it spreads out the expense of the car, leads to ownership and can help you improve your credit score. Some drawbacks to watch out for include being stuck with the same car for longer, possibly expensive monthly payments and the risk of damaging your finances.

What is a good down payment for a 35k car?

A down payment between 10 to 20 percent of the vehicle price is the general recommendation. But if you can afford a larger down payment, you can save even more money on interest payments over the life of the loan.

Is it better to finance a newer or older car?

If you're planning to finance your car, you'll be more likely to get a lower interest rate on a new car than a used one. New cars have a higher resale value and are less likely to have mechanical issues. That means the lender is less likely to lose their investment if you can't make your payments.