Car loans typically run anywhere from 24 to 84 months, offered in 12-month increments (36, 48, 60, 72, and 84 being the most common), and some lenders now write 96-month contracts. The average new-car loan sits around 66 to 69 months, so the typical buyer today is paying off a vehicle for closer to six years than the five that used to be standard.
The Range of Terms You’ll See
Lenders build car loans in 12-month blocks: 24, 36, 48, 60, 72, and 84 months, with 96-month options appearing at some lenders. Terms of 36 to 60 months were long treated as the industry norm, but rising prices have pushed borrowers longer. The average transaction price for a new vehicle reached $49,191 in January 2026, and financing that kind of balance on a five-year schedule puts payments out of reach for many buyers.
Federal Reserve data puts the average new-car loan term at finance companies at about 66 months as of late 2025, and other industry tracking pegs the overall average closer to 69 months.1Federal Reserve Bank of St. Louis. Average Maturity of New Car Loans at Finance Companies, Amount of Finance Weighted Used-car loans run in a similar mid-to-upper 60-month range.
On the short end, some lenders write 12- or 24-month loans, but many set a floor of 36 months because very short loans earn little interest relative to the cost of writing the deal. Short terms mean high payments and low total interest, which suits buyers with the cash flow to absorb them.
How the Length You Pick Changes What You Pay
The term drives three numbers at once: your interest rate, your monthly payment, and the total interest you pay over the life of the loan. Longer loans carry higher rates because the lender’s money is at risk for longer, and the borrower’s ability to repay is harder to predict over a longer window.2Federal Reserve Bank of Minneapolis. How Do Lenders Set Interest Rates on Loans? As of early 2026, average rates on a 48-month new-car loan ran about 6.84% and a 60-month new-car loan about 6.98%, with 72- and 84-month rates climbing from there.
Stretching the balance over more months does drop the monthly payment. A $30,000 loan at 6% costs about $580 a month over 60 months and roughly $455 a month over 84 months. That $125 gap is why long terms sell.
The cost of that lower payment shows up in total interest. A $30,000 loan at 5% over 60 months runs roughly $4,000 in interest. The same $30,000 at 7% over 84 months runs about $8,000, roughly double, even though each monthly payment is smaller.
Why Long Loans Put Borrowers Underwater
In the early years of a long-term loan, most of each payment goes to interest rather than principal, so you build equity slowly. Meanwhile, the car depreciates on its own schedule. The gap between what you owe and what the car is worth can stay open for years. That gap has a name: negative equity, or being “underwater” on the loan.
The Federal Trade Commission notes that because cars lose value as they age, borrowers with extended terms are especially likely to end up owing more than the vehicle is worth.3Federal Trade Commission. Auto Trade-Ins and Negative Equity: When You Owe More Than Your Car Is Worth The Consumer Financial Protection Bureau has warned that the shift toward longer auto loans creates more risk for consumers, because many borrowers may still owe on loans after they’ve stopped driving the vehicle.4Consumer Financial Protection Bureau. CFPB Report Finds Sharp Increase in Riskier Longer-Term Auto Loans
Being underwater matters most if the car is totaled or stolen. A standard auto policy pays the vehicle’s actual cash value at the time of loss, not your remaining loan balance. If you owe $32,000 and the car is worth $27,500, you’re personally on the hook for the $4,500 difference unless you carry gap insurance. Gap coverage (short for guaranteed asset protection) is worth considering on any loan longer than 60 months, since depreciation is most likely to outpace your paydown during those first years. You can buy it through your auto insurer, your lender, or the dealership, and dealership policies tend to be the most expensive.
What Limits the Term a Lender Will Offer
You don’t get to pick from the full menu. The lender does, based on the vehicle and on you.
Vehicle age and mileage set a hard ceiling on used-car terms. Older cars lose value faster and are more likely to need expensive repairs, so lenders shrink the repayment window to keep the loan balance below the car’s likely resale value. A five-year-old car might qualify for 48 or 60 months where a new one could get 72 or 84. National banks commonly cap eligibility around 10 model years and 125,000 miles; some credit unions stretch to 15 or 20 years with lower mileage caps. Specialty lenders sometimes go further and charge higher rates for the added risk. Check a lender’s vehicle-eligibility rules before applying if you’re shopping used.
The rest of what a lender considers is about you:
- Credit score. Higher scores unlock a wider range of terms and lower rates. Lower scores may limit you to shorter terms or push you into higher-rate long-term loans.
- Debt-to-income ratio. If your monthly debt is high relative to your gross income, a lender may steer you toward a longer term just to keep the payment inside its underwriting limits.
- Loan amount. Larger balances, common now that average new-car prices approach $50,000, often come with longer available terms to keep payments manageable.
- Down payment. Putting more down cuts the financed amount and the lender’s risk, which can open up shorter terms and better rates.
Choosing a Term Before You Sign
Before you agree to any car loan, the lender must give you a Truth in Lending disclosure, which spells out the annual percentage rate, the total finance charge in dollars, the total of all payments over the life of the loan, and the number and amount of each monthly payment.5Consumer Financial Protection Bureau. What Is a Truth-in-Lending Disclosure for an Auto Loan? Federal law requires those numbers up front so you can compare offers side by side.6Office of the Law Revision Counsel. 15 USC 1638 – Transactions Other Than Under an Open End Credit Plan Ask for it before you commit, not after. A 72-month offer with a friendly monthly payment can hide a total-of-payments figure thousands of dollars above a 60-month version of the same loan.
Two other things to check on the contract itself. First, whether the loan uses simple interest, where interest is calculated each month on the remaining balance so extra payments reduce future interest. Most car loans today do. Some older or subprime contracts use precomputed interest, which bakes the total interest into the payment schedule and reduces the benefit of paying off early. Second, whether there is a prepayment penalty clause. If you may want to pay the loan down faster or refinance later, these two clauses decide how much that flexibility is worth.
Shortening the Term Later
If you’re already in a long loan, refinancing can shorten the term and cut the total interest you pay. Refinancing replaces the current loan with a new one, ideally at a lower rate, a shorter term, or both. Credit unions, banks, and online lenders all offer auto refinancing.
It’s most worth doing when rates have dropped since you took out the loan, when your credit score has improved enough to qualify for a better rate, or when your budget can now support a higher payment in exchange for a faster payoff. Some lenders set minimum remaining balances or maximum vehicle ages for refinancing, so a car nearing the end of its useful life may not qualify.