What is the best car loan length?

According to most personal finance experts, the optimal length for a car loan is 48 months, although some are upping this length to 60 months due to the increased cost of vehicles and lower interest rates.

Is it better to have a longer or shorter car loan?

Lower interest rates: Since there's less risk you'll default during a shorter loan period—a four-year term compared with a seven-year term, for example—you may be able to score a lower rate. This can help you save on total interest over the length of the loan.

Is it smart to do a 72 month car loan?

Is a 72-month car loan worth it? Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go.

Is it smart to finance a car for 6 years?

Many experts recommend a five-year loan or less if you can make it work. While a longer term might get you a lower monthly payment, your cost to own the vehicle will likely be higher based on interest paid over a longer length of time.

Should I do a 3 or 4 year car loan?

A longer loan term could mean making payments for five to seven years. A shorter, three-year term will put you in full possession of your car much sooner, which means you'll get the money back in your monthly budget and can use it to pay down higher-interest debts or save.

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What is the downside of a longer car loan?

You'll Pay More Interest

Long-term car loans typically carry higher interest rates than shorter-term loans. And even if you can find a long-term loan with a low interest rate, making payments for seven or eight years will likely add up to more interest over time compared with a shorter-term loan.

Is buying a 5 year car worth it?

Buying a five–year–old car may be an even better option. You won't get the latest features, but it won't lose so much in value. And you won't be shelling out so much each month on interest to repay a loan. But it's only better value if your mileage is low – under 10,000 miles a year.

What is the most common car loan length?

What is the Average Car Loan Length? The most common loan length is currently 72 months for both new and used vehicles. The average length of a car loan changes from time to time, and 72 months is a bit higher than in previous decades.

How long is too long to finance a car?

Auto loans over 60 months are not the best way to finance a car because, for one thing, they carry higher car loan interest rates. Yet 39% of new-car buyers in the first quarter of 2021 took out loans of 61 to 72 months, according to Experian.

Why You Should Avoid car loans longer than 60 months?

Why is it better to pay a car loan 2 times a month?

By paying half of your monthly payment every two weeks, each year your auto loan company will receive the equivalent of 13 monthly payments instead of 12. This simple technique can shave time off your auto loan and could save you hundreds or even thousands of dollars in interest.

How common is a 72-month car loan?

The most common term currently is for 72 months, with an 84-month loan not too far behind. In fact, over 73% of new car loans in the first quarter of 2022 were longer than 60 months — an increase of about 33 percentage points since 2010.

What is a good interest rate for a car for 72 months?

The average interest rate for a 72-month new car loan is about 5.4% and 9.2% for a used car loan.

Is it worth paying off car loan early?

Repaying a loan early usually means you won't pay any more interest, but there could be an early prepayment fee. The cost of those fees may be more than the interest you'll pay over the rest of the loan.

Is 7 years too long for a car loan?

An 84-month auto loan can mean lower monthly payments than you'd get with a shorter-term loan. But having as long as seven years to pay off your car isn't necessarily a good idea. You can find a number of lenders that offer auto loans over an 84-month period — and some for even longer.

Is a 3 year car loan worth it?

Shorter term car loans

This also means that you'll be in debt for a shorter period of time (winning) and you won't pay as much interest! A three-year car loan would be beneficial if you have some bigger financial goals on the horizon (such as buying a house) and don't want to be in debt for too long.

How long can you finance a 2022 car?

What's the longest you can finance a car? While the typical car repayment term is 72 months, the range of repayment terms can be as short as 12 months and as long as 96 months, though not all lenders will provide the shortest- or longest-term options.

How long does it take to pay off a $30000 car?

With a loan amount of $30,000, an interest rate of 8%, and a loan repayment period of 60-months, your monthly payment is around $700.

What is average car payment?

If you're in the market for a new car, you might be asking yourself — how much is the average car payment? Experian reports that, as of the third quarter of 2021, new vehicle owners paid an average of $617 a month on their vehicles, while used car owners paid $471.

How long does the average person have a car loan?

Americans are taking many years to pay back their auto loans. The average auto loan term is 69.7 months for new cars, 68.1 months for used cars and 35.9 months for leased vehicles, according to Experian.

Is it worth buying new car in 2022?

Lower Prices: Though it may seem counterintuitive, buying a new car can save you money in the long run. Buying a new car in 2022 means not only getting a lower price but also getting a vehicle that's under warranty. This means that if something goes wrong with your car, you won't have to pay for repairs.

What matters more mileage or age?

Reliability fades with age

Even when mileage is low, the older a car gets, the less reliable it becomes. Modern cars are much more reliable, even as they age. Five-year-old cars record what is considered a major problem every three years, while 10-year-old cars are more likely to face a problem every 18 to 20 months.

What are the pros and cons of a 72 month auto loan?

Why should you avoid zero percent interest?

Zero percent financing might sound like a great deal up front. But the truth is, it's still debt! You're still making payments on something (even if you don't have to pay interest at first). All zero percent financing means is that you're signing up for a payment on something you can't afford.