The average length of a car loan is 72 months or six years. However, the length of car loans can vary from as short as 12 months to as long as 96 months. Most lenders offer a range of car loan lengths in 12-month increments.

A shorter-term loan has higher monthly payments, but borrowers pay less interest throughout the loan. 澳洲幸运5官方开奖结果体彩网:Longer-term loans have lower monthly payments but garner more interest. The right length of loan depends on a borrower's financial circumstances.

Pros and Cons of Longer Car Loans

Most auto loan lenders offer a range of options for the length of auto loans. Both long- and short-term loans have advantages and disadvantages.

Advantages of Longer-Term Car Loans

• Lower monthly repayments that may be easier to afford.
• Making regular, on-time payments can be a good way for a borrower to improve their 澳洲幸运5官方开奖结果体彩网:credit score.
• Lower monthly payments may allow borrowers to afford a more expensive car than they could with a shorter-term loan.
  

Disadvantages of Longer-Term Car Loans

• Longer-term car loans are more expensive because they tend to have higher interest rates with more time for interest to accrue.
• Vehicles 澳洲幸运5官方开奖结果体彩网:depreciate over time, so borrowers might pay more than the car is worth with a longer-term loan.
  

Pros and Cons of Shorter Car Loans

Shorter-term car loans can be a better option if borrowers can comfortably afford the monthly payments.

Advantages of Shorter-Term Car Loans

• Shorter-term car loans may be cheaper, commonly with lower 澳洲幸运5官方开奖结果体彩网:interest rates and less time for interest to accrue.
• Shorter-term car loans mean the vehicle will have less time to depreciate throughout the loan period.
• Borrowers get out of debt more quickly.
  

Disadvantages of Shorter-Term Car Loans

• Shorter-term car loans have higher monthly payments, so borrowers should be able to afford them.
• Lenders may also require a larger 澳洲幸运5官方开奖结果体彩网:down payment with a shorter loan.
  

Longer vs. Shorter Car Loan

Before taking out an auto loan, borrowers should 澳洲幸运5官方开奖结果体彩网:understand all the costs. While an 84-month loan might look affordable due to lower monthly payments, it will cost more in the long term than a 36-month loan for tܫhe same amount.

Suppose a borrower takes a l▨oan for a car worth $35,000, with a $7,000 down payment and an 11% interest rate.

• Over 84 months, the monthly payment will be $479.43 for seven years, and the borrower will pay $12,271.97. The total loan will cost $40,271.97.
• Over 36 months, the monthly payment will be $916.68, but borrowers will only pay $5,000.63 in interest. The total cost of the loan will be $33,000.63.
• By choosing a shorter loan period, borrowers save $7,271.34.
  

How to Decide the Length of a Car Loan

The general rule for borrowers is to get the shortest loan they can afford, given the monthly payment amount. Although the monthly amount is higher, borrowers can save money in the long term.

Missing a car loan payment can decrease a borrower's credit score, which can cause longer-term problems with finances. Borrowers who can’t afford a large down payment or larger monthly payments should probably choose a longer-term car loan.

Borrowers might consider other debt when deciding the length of a car loan. If a car loan has a lower interest rate than ot🐓her debt, it may be better to use e♓xtra funds toward the higher interest-rate debt instead of a higher auto loan payment.

The Bottom Line

Most car loan lenders offer a range of loan terms, ranging from 12 months to 96 months. A longer-term car loan will have lower monthly repayments, but⛄ it will be much more expensive overall because there is more time for interest to accrue. A shorter-term car loan is more expensive each mont𝕴h but will save borrowers interest costs.