Today, the most common maximum car loan length offered by lenders is 72 months, or six years. Loan Term Monthly Payment Total Interest Paid Total Cost of Vehicle 36 months $450 $2,800 $22,800 60 months $320 $4,500 $24,500 72 months $280 $5,800 $25,800 84 months $250 $7,500 $27,500 Longevity vs.
Assessing the Viability of Long-Term Auto Loans and Their True Cost
Extending the loan term increases the amount of time interest accrues, leading to a much larger total interest payment over the life of the loan. Conversely, with a very long loan, the car may break down or become obsolete before the debt is cleared, forcing the owner to pay for repairs on a car that is simultaneously losing trade-in value.
Most car loans last 5 to 7 years, while mechanical components and the body often remain reliable for 10 years or more. The Hidden Cost of Long Terms While the monthly number drops, the total price of the vehicle rises dramatically.
Assessing the Viability of Long-Term Auto Loans and Their True Cost
While stretching payments over many years might seem attractive for lowering the monthly burden, it directly impacts the total cost of ownership and financial health. In many cases, a borrower may pay more in interest than the actual cash price of the car.
More About Max car loan length
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