What’s the Longest You Should Finance a Car? Risks of 72-, 84-, 96-, and 120-Month Auto Loans

Longer-term auto loans, such as 72, 84, 96, and even 120 months (six to 10 years), can make monthly payments more affordable but often lead to higher total costs and greater financial risks. If keeping payments low is your top priority, a long loan might seem appealing.

However, shorter loan terms usually save you money in the long run by reducing interest costs and minimizing the risk of negative equity, aka being underwater on your loan.

Table of Contents

1. How long should you finance a car?
   1. What is the longest car loan term available?
2. What is the average car loan length?
3. Risks of long car loan terms
4. When might a long-term loan make sense?
5. How much does a long-term car loan cost?
6. How to switch to a shorter term
7. Are long auto loans worth it?

How long should you finance a car?

Many lenders offer car loans ranging from 24 to 120 months, but the ideal loan length depends on your financial goals. A shorter term, such as 36 or 48 months, typically offers lower interest rates and helps you build equity faster. However, longer terms—six, seven, eight, nine, or even 10 years—can reduce your monthly payment at the cost of much higher total interest.

What is the longest car loan term available?

Some lenders now offer car loans as long as 120 months (10 years). While this might make payments manageable for expensive vehicles, the long-term costs can be substantial.

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Tip

Our highest-rated auto loan lenders—including LightStream, which charges no fees—offer loan terms maxing out at 84 month, or seven years.

What is the average car loan length?

According to Experian’s third-quarter 2024 State of the Automotive Finance Market Report, the average car loan length for new vehicles is 68.5 months—5.7 years—according to industry data.

While loan terms have generally trended longer over the past decade, the 2024 average is slightly shorter than in 2020, when loan lengths peaked at 71 months (5.92 years).

Year	Average car loan length (new cars)
2012	65 months (5.42 years)
2016	68 months (5.67 years)
2020	71 months (5.92 years)
2024	68.5 months (5.7 years)

Used car loan terms tend to be slightly shorter, averaging 67 months (5.6 years).

Risks of long car loan terms (72, 84, 96, and 120 months)

Longer car loans may lower your monthly payment, but they come with significant downsides:

• Higher interest costs: The longer the loan term, the more interest you pay over time. Higher interest rates are common for extended loan terms, making the total cost of the vehicle far higher.
• Slower equity building: With a long-term loan, your car depreciates faster than you pay off the balance, increasing the risk of negative equity (owing more than the car is worth). This can be a major issue if you need to sell or trade in your vehicle before paying off the loan.
• Increased maintenance costs: With a seven-, eight-, nine-, or 10-year auto loan, your car might need expensive repairs while you’re still making payments.
• Higher risk of being upside down: Owing more than the car’s value can trap you in a cycle of rolling negative equity into a new loan, leading to higher debt burdens over time.

When might a long-term auto loan make sense?

In a few specific cases, a 72-, 84-, or even 96-month loan could be reasonable:

Situation	Consider a long loan?
You need lower monthly payments	✅ Yes
You can afford a higher monthly payment	❌ No
You plan to keep the car long-term	✅ Yes
You want the lowest possible interest rate	❌ No
You plan to sell or trade the car soon	❌ No

If you choose a long loan term, consider making extra payments to reduce the total interest paid.

How much does a long-term car loan cost?

Here’s how a 60-month (five-year) loan compares to longer terms for a $35,000 car with a $10,000 down payment and varying interest rates:

Term	Rate	Monthly pmt.	Total interest
60 mos. (5 yrs.)	7.00%	$495	$4,702
72 mos. (6 yrs.)	7.25%	$429	$5,905
84 mos. (7 yrs.)	7.75%	$387	$7,470
96 mos. (8 yrs.)	8.25%	$356	$9,234
120 mos. (10 yrs.)	9.00%	$317	$13,002

In this example, a 120-month (10-year) auto loan would cost $8,300 more in interest than a 60-month loan. The lower monthly payment might seem attractive, but the long-term cost is much higher.

How to switch to a shorter loan term

If you already have a 72-, 84-, or 96-month loan and want to shorten it, consider these strategies:

• Make extra payments: If your loan allows prepayment without penalties, paying extra each month can reduce your balance faster.
• Refinance for a shorter term: If interest rates have dropped or your credit has improved, refinancing could lower your rate and shorten your loan term, saving you money on interest. (We recommend RateGenius‘s free refinance comparison shopping tool.)

Read More

Best Auto Loan Refinance Companies and Rates

Are long auto loans worth it?

While a seven- or eight-year car loan might seem like a good idea for affordability, it often costs more in the long run. Shorter terms help you build equity faster, save money on interest, and keep you from being trapped in a cycle of negative equity. If you need lower payments, consider a larger down payment or a less expensive car instead of extending the loan term.

We think the longest car loan you should consider is 72 months—six years—if necessary. Anything longer can lead to higher costs and financial risk. If you’re wondering how many months you can finance a new or used car, lenders offer up to 120 months, but that doesn’t mean you should take it.

Bottom line: If you’re financing a car, a shorter loan term is usually the best financial decision. The average car loan length is already approaching six years, and going beyond that increases risks. Weigh the costs before committing to a seven-, eight-, nine-, or 10-year auto loan.