How long finance car

For some, this is the best choice, and many car buyers choose a car loan with the shortest term they can afford. Whether you should choose a shorter term for your car loan is truly based on your personal circumstances.

If you would rather have spaced-out payments that allow you to have more freedom within your monthly budget, you may find longer terms more attractive.

Your longer-term loan will offer you smaller monthly payments but will come with higher interest rates meaning that you will pay more for your car in the long run. For many people, the lower monthly car payment is the best option and paying more on interest is not a deal-breaker.

If you have good credit you should expect to find a financing option that works for you within that interest rate range. If you are still building your credit, there is no need to worry. There are a variety of great low-credit car loan financing options available for you to choose from.

Older cars are more likely to have higher interest rates. Another factor is the length of the loan. The longer the loan, the higher the interest rate. Credit score and several other actors can also affect an auto loan interest rate , according to ValuePenguin.

Three and five year loan terms were the average for most car buyers in the past, but longer term auto loans are a rising trend. In , the average term length was 69 months for new cars and 65 months for used vehicles. Most car loans are available in 12 month increments , lasting between two and eight years. The most common loan terms are 24, 36, 48, 60, 72, and 84 months, according to Autotrader.

The credit score sweet spot is or above. Those with a lower credit score may have higher interest rates. Scores below imply an individual has had debt defaults, bankruptcy, or they are frequently late with their monthly payments.

Those with a credit score at or lower may not be approved for a loan or their interest rates may be notably high. In the U. Additionally, the typical APR for auto loans is 3 percent to 10 percent. Individuals with poor credit are more likely to have longer loan terms than those with good or excellent credit scores. Make sure you're aware of the advantages and disadvantages of both long and short-term loans to ensure you get one that fits your budget.

Santander Consumer USA is not a credit counseling service and makes no representations about the responsible use of or restoration of consumer credit. Going car shopping? Run a red light and you may be stopped by the police and ticketed. A longer loan term can mean lower monthly auto loan payments. The smaller monthly payment that comes with the longer loan term may free up resources to pay down other high-interest debt more quickly.

Though many people seem to prefer longer loan terms, there are some good reasons to consider bucking this trend. A or month loan will likely leave you with a larger total interest payment than a loan term of 60 months or less.

If your loan term is longer than 60 months, you could be making car payments long after your warranty has expired. Many new cars come with basic warranties that last three or four years and powertrain warranties that span five or six years. A handful of automakers do offer slightly longer warranties. Once interest is factored in, this depreciation may mean that you temporarily have negative equity , or owe more on the loan than the car is worth. With a longer loan term, you build equity more slowly, and you could end up with negative equity for a much longer time period than if you had chosen a shorter loan term.

This could make selling or trading in your car more difficult down the road.