How Long Do You Have to Pay Your Car Payment?

A car payment is a regular installment towards repaying an auto loan, where money borrowed to purchase a vehicle is repaid over a predetermined period, known as the loan term. The loan term directly impacts your monthly budget and the total cost of the vehicle.

Typical Car Loan Lengths

Car loan terms commonly range from 24 to 84 months. The most frequent terms are 36, 48, 60, 72, and 84 months.

The loan term directly affects your monthly payments and total interest paid. Shorter terms, such as 36 or 48 months, result in higher monthly payments but less interest over the loan’s life. Conversely, longer terms, like 72 or 84 months, offer lower monthly payments but accrue significantly more interest. For instance, a $35,000 loan at a 9% annual percentage rate (APR) paid over 60 months might cost $8,593 in interest, while the same loan over 84 months could cost $12,302 in interest.

According to Experian data from the first quarter of 2025, the average auto loan term for new cars was approximately 68.63 months, and for used cars, it was about 67.22 months. While a 72-month term has become increasingly common due to its lower monthly payments, choosing the shortest term you can comfortably afford is often recommended to minimize total interest costs.

Influences on Loan Term Duration

Several factors determine the duration of a car loan and the terms lenders offer. A borrower’s credit score is a primary consideration, as a higher score indicates lower risk to lenders, potentially leading to more favorable interest rates and a wider selection of loan terms. Lower credit scores can limit available options.

The amount of the down payment also influences the loan term. A larger down payment reduces the principal amount borrowed, which can lead to lower monthly payments or a shorter loan term. Conversely, a smaller or no down payment means financing a larger sum, potentially necessitating a longer term to keep monthly payments affordable. The total loan amount, including the vehicle’s purchase price, taxes, and fees, directly impacts the term needed to spread out the cost.

Interest rates, influenced by market conditions and creditworthiness, also affect the loan term. Lenders often offer lower interest rates for shorter-term loans because they present less risk. This can make shorter terms more appealing despite higher monthly payments. The type of vehicle, whether new or used, can also play a role, with used cars sometimes having higher interest rates that might push borrowers towards longer terms to manage payments.

Consequences of Missed Payments

Failing to make car payments as agreed can lead to immediate and escalating consequences. Missing a payment incurs late fees, which are charges added by the lender. These fees vary by lender and state regulations, often a percentage of the overdue amount or a flat fee.

A missed payment also negatively impacts your credit score, as lenders report delinquent accounts to credit bureaus. This can lower your score, making it more challenging and expensive to obtain future credit, such as mortgages or other loans. A payment that is 30 days past due is usually reported to credit agencies, and the longer the delinquency, the greater the damage to your credit report.

If payments continue to be missed, the most severe consequence is vehicle repossession. Lenders have the right to seize the car if the borrower defaults on the loan agreement, though the specific process varies by state. Once repossessed, the vehicle is sold, and the borrower remains responsible for any outstanding balance after the sale, known as a “deficiency balance,” in addition to repossession and sale costs.

Adjusting Your Payment Schedule

Borrowers have options to manage or shorten their car loan duration. Making extra payments directly reduces the loan term and total interest paid. This can involve adding a small amount to your regular monthly payment, making an extra principal-only payment when funds allow, or adopting a bi-weekly payment schedule, which effectively results in one extra full monthly payment per year.

Paying off the loan early is another strategy to reduce the time spent making payments and save on interest. Many car loans do not have prepayment penalties, allowing borrowers to pay down the principal balance early. It is advisable to confirm this with your lender.

Refinancing the loan involves taking out a new loan, often with a different lender, to pay off the existing car loan. This can be beneficial if you qualify for a lower interest rate or a shorter term, which can reduce the total cost and duration of your loan. A lower interest rate on the new loan means more of your payment goes towards the principal, accelerating the payoff.

In situations of temporary financial hardship, contacting your lender to discuss options like payment deferment or forbearance might be possible. Deferment temporarily postpones payments, but interest continues to accrue, extending the loan’s duration and increasing total cost. These are short-term solutions to avoid default.