Car Buying

How Long Can You Get a Car Loan For?

Depending on the bank, you can get a car loan for up to 96 months. However, there are some steps to consider before applying for a long-term loan. Here's what to consider before getting a car loan.

Read time

5 minutes

Date

03.31.2023

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Key takeaways

  • Car loans have terms ranging from 24 to 96 months. The length affects your expected monthly payments and overall interest. 
  • Short-term loans offer lower interest rates but higher monthly payments, making them ideal for those with higher incomes who wish to minimize overall loan costs. 
  • Long-term loans provide lower monthly payments but come with higher interest rates, potentially costing the borrower more in the long run. 
  • FINN offers an alternative to purchasing a car through a car subscription. Monthly payments include insurance, maintenance, and roadside assistance and allow for vehicle switches every six to 12 months.

Overview

It is estimated that the average cost of a new car is around $46,000, so many are turning to car financing or loans to cover part or all of the cost of purchasing a vehicle.


With a car loan, you can borrow money from the lender and then use the funds to buy yourself a car. Then, you just need to repay the amount in the agreed-upon installments over a set time. It is worth noting that there will be interest added to the overall cost.


Financing a car is a great way to get your hands on a new vehicle without having to pay a large sum of your own money upfront – you just need to make sure it's the right option for you.


You need to factor in the length of the loan and the monthly amount payable to determine if you can afford to proceed. If you have a good regular income, then it is likely to be an ideal solution for you.

Financing a car: How long can you finance a car?

You can typically rent a car for anywhere between 24 months and even up to 96 months, but the more common option is a four-year fixed period or 72 months. Not all lenders will offer the shortest or longest-term options, so be sure to shop around for one that suits your budget.


If you opt for a shorter repayment schedule, you will pay a larger amount each month, but with less added interest.


For longer repayment terms, you are likely to pay a smaller amount each month, but due to the higher interest rates, you’ll pay a larger sum overall.


The best option for you depends on your incoming finances. If you have a high monthly income, and fewer large debts or bills, it might make sense to go for a shorter loan period, as you pay less overall.


For those with average or lower income levels, spreading the cost over a longer period should be the preferred option, as you can keep money aside for other important bills. Just remember, you will end up paying more in interest.

Short-term car loans: What you need to know

A short-term car loan might be an appealing option if you're looking to pay off your next vehicle as fast as possible. Here's what you can expect if you're thinking about a short-term car loan:


  • Lower interest rates – There is a chance you’ll have a lower rate since it’s likely you will default over a shorter loan term — a four-year term as opposed to a seven-year term, for example. This may enable you to reduce your overall loan interest costs.

  • Higher monthly payments – Due to the short loan period, monthly payments for short-term auto loans are typically higher. It's a good idea to look at your budget before agreeing to a shorter loan term to determine whether you can afford the monthly payments.

  • Lower loan cost – You could pay off your car more quickly with a short-term loan, which can reduce your overall out-of-pocket expenses. Also, it can prevent you from paying more than your car is worth.


If you have a good monthly income, then short-term loans may be more beneficial to you, as you can pay off large chunks and ultimately clear the amount faster.

Long-term car loans: What you need to know

You'll have more time to pay off your next car with a long-term loan, but you might end up spending more for the car overall. Here’s what to anticipate from a long-term auto loan:


  • Higher interest rates – Lenders may be at more risk when making long-term loans since borrowers can become less able to make their payments over time. Long-term loans have higher interest rates as a way for lenders to offset that risk.

  • Lower monthly payments – Lower monthly payments are often the result of spreading out your auto loan payments over a longer term—four, five, or six years, for example.

  • Higher loan cost – Even while the smaller monthly payments could fit into your budget, you'll end up paying more for your car than you would if you had a short-term loan — possibly by thousands of dollars.


If your monthly income is a little tight, then a long-term car loan may be the best option for you, as you pay less each month. It is worth noting that you do pay more interest and a larger amount over time.

What other options are there?

If financing and car loans sound a little complex, then you can be forgiven for thinking so. There is a lot to consider and the financial implications can be tricky to wrap your head around.


Thankfully, there is a new, modern approach to getting your hands on the latest and greatest vehicles without all the hassle through a FINN car subscription.


FINN works with just one monthly payment that covers the cost of your car, as well as insurance and maintenance – no hidden costs..


Plus, you can upgrade your car after six months to a year, so you can keep updated with all the latest car tech and gadgets.

Long-term loans: What you should know about a 96-month car loan

A 96-month auto loan is typically one of the longest terms available; however, not all lenders will offer them, and specialty lenders may have alternative, longer terms available.


An eight-year auto loan can provide you with a cheap monthly payment, though you might want to research lenders if you're looking for this. 


Finding the optimal interest rate is crucial because, over the course of 96 payments, a minor change in the interest rate can have a significant impact. You can think about other possibilities since these loans are often outside the range of terms provided by some vehicle loan lenders.

The pros 

The advantages of a 96-month car loan depend on your current financial state. You might have a steady average income each month, but not a lot tucked away in savings for a large down payment. 


If the above applies, then a 96-month loan might be the best option for you, as you can spread the cost and pay a smaller monthly amount each month. 


Just make sure you keep up with your monthly payments, as a car loan is a priority bill, and the lender can seize the car should you fail to pay.

The cons 

If you choose a 96-month car loan, then you’ll end up paying significantly more overall due to the higher interest rates. You also get fewer options, as 96-month car loans aren’t as popular as 72-month loans.


This could be an issue if you have your heart set on a certain vehicle. It may not be impossible to find the model you want, but it will certainly be harder.


Also, you will be stuck with the car for eight years, which is a long time, and a lot can change during that period.


Should you want to trade in your car before the eight-year period has passed, you must use the trade-in value of the car to first pay off your financing. Due to the longer period, the car may be worth far less after a certain number of years.

The bottom line

It really is a case of personal circumstances when considering a lengthy car loan, and you should think carefully about the financial implications.


Short-term loans might be ideal for those with a high, steady monthly income, and you end up paying less in interest due to the shorter terms.


But for those who earn around the national average or below, or those that have large monthly payments to make already – the longer-term option may seem more appealing.

How a FINN car subscription works

1. Choose your perfect car

Pick your next car and select the term and mileage package that’s right for you.


2. Get approved in a few clicks

Submit your information and get approved in under five minutes.


3. Delivery straight to your home

Schedule for FINN to deliver your new car at a convenient date so you can focus on the road ahead.


4. Just hit the road and swap when you’re done

All that’s left to do is drive. When your term is over, you can return the car and pick out something new, or simply walk away.

How a FINN car subscription works
How a FINN car subscription works

How a FINN car subscription works

1. Choose your perfect car

Pick your next car and select the term and mileage package that’s right for you.


2. Get approved in a few clicks

Submit your information and get approved in under five minutes.


3. Delivery straight to your home

Schedule for FINN to deliver your new car at a convenient date so you can focus on the road ahead.


4. Just hit the road and swap when you’re done

All that’s left to do is drive. When your term is over, you can return the car and pick out something new, or simply walk away.