How Long Can You Get a Car Loan For?

A car loan represents a financial agreement where a borrower receives funds to purchase a vehicle and agrees to repay the borrowed amount, plus interest, over a specified period. This repayment period is known as the loan term. The length of this term is a significant factor for car buyers, as it directly influences both the affordability of monthly payments and the total cost of financing the vehicle. Understanding how car loan terms function is essential for making informed decisions during the vehicle acquisition process.

Typical Car Loan Durations

Car loan terms typically range from 36 to 84 months, with some lenders offering options as short as 12 months or as long as 96 months. The most common loan terms available are 36, 48, 60, 72, and 84 months. While 72 months is currently a common loan length for both new and used vehicles, the average loan term for new cars was approximately 68.63 months and for used cars was around 67.22 months in early 2025. Longer terms, such as 84 months, have become more prevalent as they can result in lower monthly payments, making vehicles appear more affordable.

Factors Affecting Loan Term Eligibility

Several factors influence the maximum car loan term a borrower can obtain. A borrower’s credit score is a primary determinant. A higher score generally indicates lower risk to lenders, leading to more favorable loan terms, including longer durations and lower interest rates. Conversely, individuals with lower credit scores may face limitations on available loan terms, often being restricted to shorter periods or higher interest rates.

The age and type of the vehicle being financed also play a role in determining loan term eligibility. Older vehicles, especially those exceeding 10 years in age or with high mileage, may be subject to shorter maximum loan terms due to increased depreciation risk and potential mechanical issues. Lenders typically prefer newer vehicles because they tend to retain value more effectively, reducing the lender’s risk in case of default. Additionally, the loan amount itself can influence the term, as larger loans might necessitate longer terms to maintain manageable monthly payments within a lender’s guidelines.

Lender policies vary, with banks, credit unions, and dealership financing departments each having different internal guidelines regarding maximum loan terms. Some lenders might cap terms at 84 months, while others could extend to 96 months or even longer in specific circumstances. Proof of income and employment stability are also considered, as lenders assess a borrower’s ability to consistently meet repayment obligations over the chosen term.

Financial Implications of Loan Terms

The chosen car loan term impacts both monthly payments and the total cost of the vehicle. Longer loan terms result in lower monthly payments because the principal and interest are spread over more months. This can make a car seem more affordable on a monthly budget. However, a longer term increases the total amount of interest paid over the loan’s life. For example, financing a $35,000 car at 9% APR for 84 months instead of 60 months could result in thousands of dollars more in total interest.

Shorter loan terms, while having higher monthly payments, reduce the total interest paid, lowering the overall vehicle cost. This is because interest accrues for a shorter period, and more of each payment goes toward reducing the principal balance sooner. Longer loan terms also increase the risk of being “upside down” on a loan, meaning the borrower owes more than the car’s market value. Cars depreciate quickly, often losing value in the first year. A prolonged loan term can mean the loan balance decreases slower than the vehicle’s depreciation, leading to negative equity.

Choosing the Right Loan Term

Selecting an appropriate car loan term requires a careful balance between managing monthly payments and minimizing the total cost of the loan. It is important to assess one’s budget and determine a comfortable monthly payment amount that does not strain finances. While a lower monthly payment from a longer term might be appealing, it is crucial to understand the trade-off of paying significantly more in total interest.

Consideration of how long the vehicle will be owned is also important. Opting for a shorter loan term, such as 36 or 48 months, can help build equity faster and reduce the risk of being upside down on the loan. A general guideline suggests financing new cars for no more than 60 months and used cars for no more than 36 months, if financially feasible. By weighing monthly affordability against the long-term financial implications and personal ownership plans, a borrower can make a decision that aligns with their financial goals.