Most car loans run for 36 to 84 months

A car payment plan is a loan you take out to buy a car, and you pay it back in monthly installments over a set period. That period — called the loan term — is usually between three and seven years. The most common lengths are 60 months (five years) and 72 months (six years), though you will see 36-month, 48-month, and 84-month plans as well.

The length you choose affects two things: how much you pay each month, and how much interest you pay overall. A shorter loan means higher monthly payments but less total interest. A longer loan spreads the cost across more months, so each payment is smaller, but you pay more in interest because the lender is taking on the loan for longer.

The loan term is not something that happens to you — it is something you choose when you take out the loan, usually by picking from the options your lender offers. Different lenders offer different maximum lengths, and some will let you choose a term in between the standard ones.

Key Takeaways

  • Car loans typically last 36 to 84 months, with 60 and 72 months being the most common lengths.
  • Shorter loans mean higher monthly payments but lower total interest paid over the life of the loan.
  • Longer loans mean lower monthly payments but higher total interest paid because you are borrowing the money for more time.
  • You choose the loan term when you take out the loan, and different lenders offer different options.
  • Your credit score, income, and the price of the car all affect which loan terms a lender will offer you.

Why lenders offer different loan lengths

Lenders offer a range of loan terms because different people have different situations. Someone buying a used car for $8,000 might want a 36-month loan to pay it off quickly. Someone buying a new car for $35,000 might need a 72-month loan to keep the monthly payment manageable on their income.

Lenders also use loan length as a tool to manage risk. A longer loan means more time for something to go wrong — you could lose your job, have a medical emergency, or the car could break down. To offset that risk, lenders typically charge higher interest rates on longer loans. This is why a 36-month loan usually has a lower interest rate than a 72-month loan for the same car and the same borrower.

How your credit score affects the loan terms you are offered

If you have a strong credit score — usually 700 or above — lenders will offer you shorter loan terms with lower interest rates. They see you as less risky because your history shows you pay back what you borrow.

If your credit score is lower, lenders may only offer you longer loan terms, sometimes at higher interest rates. This is because they view you as higher risk. A longer term gives them more time to collect payments, which makes the loan feel safer to them even though you end up paying more in interest.

Some lenders have minimum credit scores below which they will not lend at all. Others specialize in lending to people with lower credit scores but charge higher interest rates and may require a larger down payment.

The difference between 60 and 72 month loans

A 60-month (five-year) loan and a 72-month (six-year) loan are the two most common choices. The difference is one extra year of payments.

On a $25,000 car with an interest rate of 6%, a 60-month loan costs roughly $483 per month, and you pay about $3,980 in interest total. A 72-month loan on the same car costs roughly $410 per month, and you pay about $4,720 in interest total. The monthly payment is $73 lower, but you pay $740 more in interest because you are borrowing for a full year longer.

The choice between them depends on your budget. If you can afford the higher monthly payment and want to pay less interest overall, choose 60 months. If you need the lower monthly payment to fit your budget, choose 72 months and accept that you will pay more interest.

Shorter loans (36 to 48 months) and what they cost

A 36-month or 48-month loan is the fastest way to pay off a car. You own it free and clear sooner, and you pay significantly less in interest.

The trade-off is a much higher monthly payment. On that same $25,000 car at 6%, a 36-month loan costs roughly $738 per month. That is $255 more per month than a 60-month loan. Over three years, that adds up, so this option only works if your income can handle it.

Shorter loans are common for people buying used cars that cost less, or for people with higher incomes who want to minimize interest and own the car quickly. They are also a good choice if you plan to keep the car for many years after paying it off.

Longer loans (84 months) and when they make sense

An 84-month (seven-year) loan is the longest standard option most lenders offer. The monthly payment is the lowest of all the options, but you pay the most in total interest.

On that $25,000 car at 6%, an 84-month loan costs roughly $360 per month, but you pay about $5,440 in interest total. That is $1,460 more in interest than a 60-month loan.

An 84-month loan makes sense only if you absolutely need the lowest possible monthly payment and have no other choice. The risk is that cars depreciate — they lose value — and after several years, you may owe more than the car is worth. If the car is totaled in an accident or breaks down badly, you could be stuck paying for a car you can no longer drive.

What happens if you want to pay off your loan early

Most car loans let you pay off the full balance before the loan term ends without a penalty. This means if you take out a 72-month loan but have extra money in a few years, you can pay it off in 60 months or 48 months and stop paying interest.

Before you sign the loan agreement, ask the lender whether there is a prepayment penalty — a fee charged if you pay off the loan early. Most lenders do not charge this, but some do, so it is worth checking. If there is no penalty, paying extra toward your loan when you can is a smart way to reduce the total interest you pay.

Frequently Asked Questions

Can I change my loan term after I sign the agreement?

No, the loan term is set when you sign. You cannot change it to a shorter or longer period. Your only option is to pay off the loan early if you want to shorten it, or to refinance (take out a new loan to pay off the old one), which starts a new loan term. Refinancing has its own costs and interest rate, so it only makes sense in specific situations.

What is the shortest car loan I can get?

Most lenders offer 36-month loans as their shortest option, though some offer 24-month loans. The shorter the loan, the higher the monthly payment, so lenders are cautious about offering very short terms because they want to make sure you can afford the payment. If you want a very short loan, you may need a higher income or a larger down payment to convince a lender it is safe.

Does a longer loan hurt my credit score?

Taking out a longer loan does not hurt your credit score more than taking out a shorter one. What matters to your credit score is whether you make your payments on time. A 72-month loan and a 60-month loan affect your score the same way if you pay both on time. The difference is only in how much interest you pay.

What if I cannot afford any of the loan terms a lender offers?

If the monthly payments are too high even on an 84-month loan, the car is too expensive for your current budget. Consider buying a less expensive used car, saving for a larger down payment to reduce the loan amount, or waiting until your income increases. Stretching beyond what you can afford leads to missed payments, which damages your credit and can result in the car being repossessed.

Is it better to choose a shorter or longer loan term?

A shorter loan is better if you can afford the higher monthly payment, because you pay less interest overall and own the car sooner. A longer loan is better if you need a lower monthly payment to fit your budget. The best choice is the longest term you are comfortable with — the one where the payment fits your monthly income without strain.