What Is the Average Car Loan Length?
Written by
Angela Mae
Edited by
Emily Gadd
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The average car loan length is 68 months, according to the 2024 Experian State of the Auto Finance Market report. This is slightly higher than it was the year before. Typically, auto loan terms are 48, 60, 72 or 84 months.
Average Car Loans for New and Used Cars
For those with excellent (super prime) credit, the typical new car loan length is 64 months, a 1.04% increase from 2023. New auto loan terms range from around 71 to 74 months for all other borrowers.
The typical auto loan term for used car loans is between 63 and 68 months. Borrowers with the best credit (781+) and worst credit (300 to 500) tend to get the shortest loan terms.
From 2023 to 2024, used car loan terms have remained relatively stable, except for borrowers with deep subprime credit (300-500) and subprime credit (501-600). For these borrowers, average loan terms have increased by about one to two months.
Common Car Loan Terms Explained
If you’re getting an auto loan, you’ll want to consider the following:
- Loan term: This is how long you have to pay back what you borrow. It’s usually indicated in months (like a 36-month repayment term). A longer term usually means more total interest charges. You may be able to pay your loan off early without a prepayment penalty.
- Principal: This is the amount you borrow.
- Interest: This is the cost of borrowing money, expressed as a percentage. Lenders set the rate based on your credit score, income and other factors. The interest rate impacts the total loan cost.
- Monthly payment amount: This is how much you pay each month. It includes the loan’s principal balance plus interest.
Here’s a general breakdown of how an auto loan might look (based on term and rate):
| Loan Term | Monthly Payment | Interest Paid | Best For |
|---|---|---|---|
| 36 months | Highest | Lowest | People who want to pay off their loan quickly and save on interest |
| 48 months | High | Lower | Buyers looking for a balance between cost and savings |
| 60 months (5 years) | Moderate | Moderate | Most common loan term for affordability |
| 72 months (6 years) | Lower | Higher | Buyers wanting lower monthly payments |
| 84 months (7 years) | Lowest | Highest | Those prioritizing low payments over total cost |
Here’s an example of an auto loan in action:
| Loan Term | Interest Rate | Monthly Payment | Total Loan Interest |
|---|---|---|---|
| 36 months | 6.94% | $616.99 | $2,211.76 |
| 48 months | 6.94% | $478.37 | $2,961.68 |
| 60 months | 6.94% | $395.46 | $3,727.48 |
| 72 months | 6.94% | $340.40 | $4,509.10 |
| 84 months | 6.94% | $301.27 | $5,306.46 |
Short-Term vs. Long-Term Car Loans: Pros and Cons
Knowing the average length of a car loan is one thing. What’s more important is knowing the advantages — and drawbacks — of choosing a short-term vs. long-term loan. Here are the big ones:
| Feature | Short-Term Car Loan (24-48 Months) | Long-Term Car Loan (60-84+ Months) |
|---|---|---|
| Monthly Payment | Higher monthly payments | Lower monthly payments |
| Total Interest Paid | Lower overall interest cost | Higher overall interest cost |
| Loan Interest Rates | Typically lower | Typically higher |
| Equity in Vehicle | Builds equity faster | Slower equity growth, higher risk of negative equity |
| Loan Approval Requirements | Stricter, requires higher income | Easier approval with lower monthly obligations |
| Vehicle Age Considerations | Ideal for new or lightly used cars (due to vehicle depreciation) | May be used for older vehicles but with higher rates |
| Best for | Those who can afford higher payments and want to save on interest | Those needing lower monthly payments and more flexibility |
Certain things, like eligibility criteria, depend on the lender. Some lenders might view a longer-term loan as riskier and have stricter requirements. Interest rates for used car loans may also be higher.
Benefits of Shorter Car Loan Terms (36-48 months)
The main benefits of getting a shorter car loan term — one that’s between 3 and 4 years — are:
- Lower interest costs over the life of the loan
- Faster loan payoff, meaning ownership sooner
- Less risk of being underwater (owing more than the car’s value)
If you save up for a down payment, you could also get a smaller loan. This generally means a lower interest rate and faster loan payoff, too.
Downsides of Shorter Loan Terms
But shorter loan terms come with their drawbacks:
- Higher monthly payments, making budgeting tougher
- May require a larger down payment to afford them
The larger your loan is, the higher your monthly payments — especially if you have a higher interest rate. Larger payments can make it harder to manage the loan, even if it does result in an early payoff.
Benefits of Longer Car Loan Terms (60-84 months)
The average car loan length is 68 months, which is considered a longer loan term. Here are the main advantages of these loans:
- Lower monthly payments, making expensive cars more accessible
- More flexibility for those with other financial obligations
With smaller monthly payments, you’ll have more cash for other financial obligations. This can help if you don’t have a lot of room in your budget, but you need a vehicle right now — such as for work.
Downsides of Longer Loan Terms
But of course, longer loan terms also come with their drawbacks:
- Higher total interest costs
- Greater risk of negative equity as the car depreciates
- Higher chance of needing repairs while still paying the loan
Ultimately, longer terms mean paying more for the vehicle. For example, a $30,000 auto loan with a 6% APR and a 36-month term would cost about $32,856 in total. That same loan with an 84-month term would cost $36,814.
How to Choose the Right Loan Length
Here are some tips on choosing the right auto loan term for you:
- Consider your monthly budget and total loan cost: Calculate how much you’re willing to spend on a car, and make sure you have enough money coming in to cover the new loan.
- Think about how long you plan to keep the car: If you don’t plan to have the car for a long time, or if you intend to trade it in, a longer term could be better. But if you want to pay it off sooner and keep the vehicle for the long haul, a shorter loan could save you money.
- Compare lenders: Different lenders charge different rates. Some may have additional fees or only offer shorter (or longer) terms. Make a shortlist of your preferred lenders and get prequalified to see what you could get.
- Check interest rates: Rates can vary based on loan term, credit score, debt-to-income ratio and lender. Even half a percentage point could make the difference of hundreds or thousands of dollars over the life of the loan.
- Use a car loan calculator: Use an online calculator and run the numbers to see which auto loan term suits your needs and budget. You may want to include sales tax, registration and other fees.
- Consider your other debts: If you already have credit cards and other loans, weigh your options before taking on another debt. If you can reliably pay the new loan back and it won’t hurt your credit score, now might be the time to take out a loan. Otherwise, you may want to pay off existing debts first to free up cash.
It may be possible to refinance an auto loan for a shorter (or longer) repayment term. Refinancing for a longer term could get you a lower monthly payment, but will increase the amount of time it takes to pay off the debt. Refinancing for a shorter term could raise your monthly payment, but save you money on interest — and get you a fully paid car sooner.
FAQ
- What is the best car loan term for me?
- This depends on your income, current debts and long-term goals. If you want to get out of debt sooner and don't mind the larger payments, go with a shorter-term loan. This can also save you money in interest.
- If you don't mind paying more in total interest and you like the idea of smaller payments, a longer term could be best. You can also choose a 5-year term if you want something middle-of-the-road.
- Do longer car loans have higher interest rates?
- Your interest rate is determined by many factors, including your credit score and repayment term. Some lenders consider a longer term as being riskier, which could mean a higher interest rate. Compare several lenders and their rates to get the most affordable loan possible.
- Can I pay off my car loan early?
- Generally yes, but some loans come with a prepayment penalty. This is a fee for paying off the loan ahead of schedule.
- If you have a car loan, check the loan documents to see if there's a prepayment penalty. If there isn't, you shouldn't have to pay anything extra to pay it off early.
- How does loan term affect my credit score?
- The loan term doesn't directly affect your credit score, but taking on a new debt does. Your average length of credit across all accounts makes up 10% of your score.
- Adding a new account could decrease the average slightly. Things like on-time payments and credit mix also contribute to your score, so a new car loan could be a good thing -- if you keep up with payments.
- Should I choose a longer term for a lower monthly payment?
- A longer term -- 60 to 84 months -- could get you a lower monthly payment than a shorter term. But you'll likely pay more in total interest charges over the life of the loan.
- Other ways to lower your monthly payment are to have a larger down payment or get a less expensive car.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- Experian "State of the Auto Finance Market"
- CFPB "What is a prepayment penalty?"
- CFPB "Auto Loans Key Terms"
- CFPB "How does a lender decide what interest rate to offer me on an auto loan?"
- Equifax "Comparing Auto Loans: New Car Loans vs Used Car Loans"
- CFPB "CFPB Report Finds Sharp Increase In Riskier Longer-Term Auto Loans"
- FTC "Auto Trade-Ins and Negative Equity: When You Owe More than Your Car is Worth"
