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How Long Can You Finance a Used Car?


As you think about buying an automobile, it’s important to think about more than the vehicle itself. You also need to think about how you’re going to pay for it. The best move is to just buy it outright, paying in cash—but that’s just not an option for everyone. If you don’t have cash on hand, you can always finance your purchase. The question is, for how long can you finance your vehicle—and for that matter, which loan term is the best for a used car buyer? We’ll walk you through some of the options in the paragraph below.

Which Loan Terms are Available?

The first thing you’ll want to know is what the available loan terms are. The general rule of thumb with regard to car loans is that they are structured in increments of 12 months, and they typically run anywhere from two years to a full eight. So, the options you’ll have to choose from are 24 months, 36 months, 48 months, 60 months, 72 months, and 84 months. Interestingly enough, the average new car loan is around five-and-a-half years, or 65 months, while the average loan term for used vehicles is a bit shorter.

Long-Term Loans: Pros and Cons

When you’re sitting down at the dealership and going over the different loan options, you might find yourself drawn toward longer loan terms. After all, stretching your loan out over more months means the payments themselves will be smaller, and you’ll have more money in your pocket. Here’s the thing, though. These long-term loans also come with higher interest, which means that while you’ll have more cash on hand from month to month, you’ll ultimately spend a lot more money total, over the course of the loan.

Short-Term Loans: Pros and Cons

You can probably extrapolate from this what some of the pros and cons of short-term loans are. Yes, because you are condensing your loan into a shorter timeframe, you’ll end up paying a little more month-to-month. That might impede your cash flow and your flexibility some. Then again, the loan will come with lower interest, so it will actually be a much more affordable way for you to get your vehicle in the long run. Also note that, for a used vehicle—which is already going to be on the affordable side—you’ll probably still have reasonably low monthly payments.

Our Advice for Selecting a Used Car Loan

So where do we come down, at the end of the day? Well, again, pay cash if you can, and avoid financing altogether. If you do need a loan on your used car, though, shorter is always the way to go. Look at your monthly budget to see what kind of payments you can take on, and try to pick a loan that puts you in that range—without stretching the loan term any further than is necessary. That’s the best way to get a truly affordable used vehicle!