Typical Car Loan Period Options for Every Budget

Whether you're a first-time car buyer or a seasoned driver, choosing the right car loan period is crucial. A longer loan period can lower your monthly payments but may increase the total interest paid over the life of the loan.

If you have a tight budget, a 36-month car loan is a popular option. This loan period is often considered the sweet spot for those who want to pay off their car loan quickly and avoid high interest rates.

A 48-month car loan is another common choice, offering a balance between monthly payments and total interest paid.

The typical car loan period can vary significantly depending on your credit score and risk level. For super prime borrowers, the average loan term is a relatively short 65.53 months.

If you have a prime credit score, you can expect your car loan to last around 68.63 months. This is about 3 months longer than a super prime loan.

Borrowers with near prime credit scores typically have loan terms that are only slightly shorter, at 68.28 months. This is still a relatively long loan period.

For subprime borrowers, the average loan term is 66.35 months, which is about 2 months shorter than a near prime loan.

Deep subprime borrowers, however, have the shortest average loan term of 63.67 months.

Here's a breakdown of the average loan terms by credit score:

When you're considering a car loan, one of the most important factors is the loan term length. This can have a significant impact on your monthly payments and overall financial situation.

You can choose from various loan term lengths, ranging from 63.67 months for deep subprime borrowers to 68.63 months for prime borrowers, as shown in the chart below.

Having a longer loan term can be beneficial, as it can lead to lower monthly payments that may be easier to afford.

The average loan term for a car loan varies depending on the credit score of the borrower. For super prime borrowers with a credit score of 781-850, the average loan term is around 65.53 months.

The loan term also varies for new and used cars, with new car loans averaging 68.48 months and used car loans averaging 67.41 months. Borrowers with subprime credit tend to have longer loan terms, with deep subprime borrowers averaging close to 64 months.

Here's a breakdown of average loan terms by credit score:

The average new car loan term is a significant factor to consider when financing a vehicle. According to recent data, the typical loan term for new cars has been around 68.48 months, a slight increase from the previous year.

This means that new car buyers can expect to make payments for nearly six years. The loan terms are often available in 48, 60, 72, or 84 months, allowing buyers to select the repayment period that suits their financial situation.

Here's a breakdown of the average loan terms for new cars:

As you can see, borrowers with lower credit scores tend to have longer loan terms, which often correlate with higher interest rates and greater total costs.

The average used car loan term has remained relatively steady, hovering around 67.41 months. This is a significant trend, especially when compared to the average loan term for new cars, which is even longer.

Borrowers with subprime credit have seen a notable increase in average loan term, with deep subprime borrowers averaging loan terms close to 64 months. This is a growing trend toward extended loan terms, even for used vehicles.

Here's a breakdown of how loan terms can impact your finances:

As you can see, choosing a longer loan term reduces monthly payments but increases total interest costs, making the car more expensive over time.

A borrower's credit score can have a significant impact on the length of their car loan. Borrowers with super-prime credit typically have shorter loan terms of around 64 months.

Those with deep subprime credit may see terms stretching beyond 72 months, which often correlates with higher interest rates and greater total costs. This is a key consideration for anyone looking to purchase a car.

The average auto loan term was more than 69 months for new cars and over 67 months for used vehicles in the fourth quarter of 2021. This is according to the Experian State of the Automotive Finance Market report.

For new-car buyers with credit scores of 781 to 850, the average new-car loan term is nearly 65 months. Those with scores of 500 or lower, however, have a much longer average loan length of just over 72 months.

Long-term loans can be a good option for those who want to lower their monthly repayments. This is because lower monthly payments may be easier to afford, allowing borrowers to allocate their finances more effectively.

Making regular, on-time payments with a long-term loan can also be beneficial for credit scores. By consistently paying off their loan, borrowers can demonstrate responsible financial behavior to lenders.

One potential drawback of long-term loans is that they may come with higher interest rates, which can increase the overall cost of the loan. However, with the right loan terms, long-term loans can be a viable option for those who need to finance a more expensive car.

Long-term loans can be a great option for those who need a more affordable monthly payment. Lower monthly repayments are one of the key advantages of longer-term car loans.

Making regular, on-time payments is a good way to improve your credit score. This can be a significant benefit, especially if you're looking to finance other purchases in the future.

Lower monthly payments can also give you the flexibility to afford a more expensive car than you could with a shorter-term loan. This means you can drive a nicer vehicle without breaking the bank.

Here are some of the key advantages of long-term loans at a glance:

A longer-term car loan may seem more affordable at first, but it can end up costing you more in the long run. This is because you'll be paying interest over a longer period of time.

The key is to understand all the costs involved in a car loan. For example, if you take out a loan for a $35,000 car with an 11% interest rate, you'll pay a lot more in interest over 84 months than you would over 36 months.

Here's a comparison of the two:

As you can see, choosing a shorter loan period can save you thousands of dollars in interest payments. In this example, choosing a 36-month loan instead of an 84-month loan would save you $7,271.34.

Choosing the right loan term for your car can be a bit overwhelming, but it's essential to make an informed decision. The average auto loan term in the fourth quarter of 2021 was over 69 months for new cars and over 67 months for used vehicles.

You might be wondering why people choose longer loan terms. One reason is that it reduces monthly payments, making it more manageable. For example, a 72-month loan term can lower your monthly payments to $638.16, but it will cost you nearly $10,000 in total interest costs.

On the other hand, a shorter loan term can save you money in the long run. According to the article, a shorter-term car loan may have a lower interest rate, making it even more affordable.

Here's a comparison of loan terms and their total costs:

As you can see, a longer loan term reduces monthly payments but increases total interest costs. This makes the car more expensive over time.

Car loan lenders typically offer loan terms ranging from 12 months to 96 months. This means you can choose between a shorter or longer loan period.

A longer-term car loan, such as 96 months, will have lower monthly payments. However, the total cost of the loan will be much higher due to the extra time for interest to accrue.

On the other hand, a shorter-term car loan is more expensive each month, but it will save you money in interest costs over the life of the loan.

Here's a breakdown of the typical car loan periods and their implications:

Ultimately, the choice between a shorter or longer car loan depends on your individual financial situation and priorities.