How Long Should a Car Loan Be?
For most buyers, a car loan should last 60 months or less. Every extra year beyond that may lower the monthly payment, but it also means paying real money in interest and spending longer owing more than the car is worth.
The mistake we see readers make most often is choosing a term to hit a monthly payment target instead of first calculating the total interest and the underwater-risk window for each loan length.
The Market Has Drifted Past 60 Months
Sixty months, five years, used to be the standard benchmark for a car loan. It no longer describes what most buyers actually sign. Experian's own automotive data put the average new-vehicle loan term at 69.5 months and the average used-vehicle term at 67.7 months as of the first quarter of 2026.
The longer end of that range is growing fastest. Experian's own reporting shows 35.55% of new-vehicle loans now run longer than six years, meaning 73 months or more, up from 30.83% a year earlier. A term that once looked unusually long is now closer to a third of all new-car buyers.
What 60, 72, 84, and 96 Months Cost
Run the same $35,000 loan at the same 6.8% APR, Experian's reported mid-2025 average new-car rate, across four common term lengths and the gap shows up fast. A 60-month term pays $689.74 a month and $6,384.65 in total interest. Stretch the same loan to 72 months and the payment drops to $593.36, but total interest climbs to $7,721.89, about $1,337 more.
Go to 84 months and the payment falls further, to $524.83, while interest rises to $9,085.59. At 96 months the payment is $473.70 and total interest reaches $10,475.59, nearly double the 60-month figure on the exact same loan. Each extra 12 months buys a smaller payment and a bigger interest bill. That trade is real at every length, including the ones in the middle. Run your own loan amount and rate through our auto loan calculator to see this same math on your actual numbers, and open the full auto loan amortization schedule to watch how slowly the balance falls in the first years of a long-term loan.
Why a Longer Term Raises Underwater Risk
A car loses value the moment you drive it off the lot, and a long loan pays down the balance slower than the car depreciates for a big chunk of the term. That combination is called being underwater or upside-down: the loan balance is higher than the car is worth.
The Consumer Financial Protection Bureau's own 2024 analysis of auto loan data found the connection directly. Borrowers who rolled negative equity from a prior loan into a new one carried an average loan-to-value ratio of 119.3% at origination and an average loan term of 73 months, compared to borrowers with a positive trade-in, who averaged an 89.1% loan-to-value ratio on a 68-month term. The negative-equity group was also more than twice as likely to have their loan assigned to repossession within two years as the positive-equity group, according to the same CFPB report. Longer terms and higher underwater risk showed up together in the government's own numbers.
Used-vehicle depreciation itself varies year to year: Black Book and Fitch Ratings data cited in that same CFPB report shows two-to-six-year-old vehicles losing between roughly 8% and 17% of value annually across 2011 through 2022. A loan stretched to 84 or 96 months is racing a depreciation curve that rarely slows down enough to catch up.
When a Longer Term Can Make Sense
A longer term is not automatically the wrong call. It fits a buyer who plans to keep the car well past the loan's payoff date and has no plan to trade it in early, since the underwater period matters far less if you are not selling or trading during it. It also fits a 0% or near-0% promotional loan, since stretching a genuinely interest-free loan over more months costs nothing extra in interest, unlike stretching a market-rate loan.
It does not fit a buyer who expects to trade the car in within three or four years, finances close to the full purchase price with little or no down payment, or is choosing the term mainly to fit a payment into a tight monthly budget. That last case is the one Experian's own trend data suggests is becoming more common, since a rising share of buyers are reaching for 73-plus-month terms as new-car prices climb rather than as a deliberate ownership plan.
How to Pick the Right Term
Work backward from the total interest cost, not the monthly payment. Run your actual loan amount and rate at 60, 72, and 84 months in our auto loan calculator and compare the total interest column for each term alongside the payment. The dollar gap between terms is the real price of the lower payment, and it is worth seeing before you sign rather than after.
Then check how long you plan to keep the car against how long it takes the loan balance to fall below the car's likely resale value. A term shorter than your expected ownership window keeps you above water for most of the loan. A term that runs past your expected trade-in date sets up exactly the negative-equity scenario the CFPB's own data connects to longer terms and higher repossession risk.
Already signed a longer-term loan and want out of it early? Refinancing does not shorten the term by itself, since a refinance usually resets the clock on a new loan, but it can lower your rate if your credit improved since you first financed, which shrinks the total interest without changing how long you owe. Pair a refinance with extra principal payments if the goal is actually paying the loan off sooner, and run both scenarios through our auto loan refinance calculator before assuming a lower rate alone solves the underwater-risk problem a long original term created.
This math changes if your loan carries a true 0% rate, since the interest-cost gap between terms disappears entirely and the underwater-risk question becomes the only one left to weigh. It would also change if you are financing a vehicle you know you will keep for a decade or more, since a longer term's underwater window matters far less against an ownership horizon that outlasts it either way.
Frequently asked questions
How many months is a typical car loan?
As of the first quarter of 2026, Experian's own automotive data put the average new-vehicle loan at 69.5 months and the average used-vehicle loan at 67.7 months. That is well above the traditional five-year, 60-month benchmark, and the share of loans running 73 months or longer has been climbing.
Is 72 months too long for a car loan?
On a $35,000 loan at 6.8% APR, 72 months costs about $1,337 more in total interest than 60 months, for a payment that is roughly $96 lower per month. It is not automatically too long, but it is a real cost, and it is worth running your own numbers before deciding the lower payment is worth that trade.
Is a 75-month or 84-month car loan a bad idea?
It raises both the total interest you pay and the length of time you are likely to owe more than the car is worth. The CFPB's own data found borrowers who financed negative equity into a new loan averaged a 73-month term and a 119.3% loan-to-value ratio at origination, well above borrowers with a positive trade-in. An 84-month loan sits in that same higher-risk range unless you plan to keep the car far past the loan's payoff date.
What is the longest term you can get on a car loan?
Some lenders offer terms up to 84 or even 96 months, though availability depends on the lender, the loan amount, and your credit profile. A longer maximum term does not mean it is the right one for your situation. Run the total interest cost at each available length before choosing the longest term simply because it is offered.
How long should a car loan be if I want to avoid being underwater?
Match the term to how long you actually plan to keep the car, and lean toward 60 months or shorter if you expect to trade it in within a few years. A shorter term pays down the balance faster relative to how quickly the car loses value, which shrinks the window where you owe more than the car is worth.
Sources
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