How Long Can You Finance a Used Car?

Finance Paperwork with Glasses

On average, auto loans keep getting longer and longer in Tempe. So, just how long can you finance a used car? The typical length of any auto loan is 60 to 72 months, with used car loans clocking in around 60 months, according to Experian. But, that may or may not be the right time frame for you. Auto financing is flexible, and Rocky's Auto Credit is here to help. Let’s find out more about the factors that go into auto loan term length.

How Long Are Used Car Loans?

Experts have been predicting that auto loans will get longer since 2017, and this immediately proved to be true. Just one year later, over 60% of used auto loans fell within the 60- to 84-month range. That translates into 5 to 7 years of monthly car payments, which is quite a lengthy time to commit for most Glendale drivers.

What is the Maximum Time You Can Finance?

There is no official maximum time frame for a used auto loan, but there are some considerations to keep in mind. For example, some institutions choose not to finance vehicles over 7 years old with over 100,000 miles. So if your vehicle is a 5-year-old model in Phoenix, you might find lenders are less likely to finance your car for a 60-month period. However, every lender is different. It’s worth asking for your lender’s car financing guidelines to see how they will work with you.

Pros and Cons of Loan Terms

Long Used Car Loan Terms

  • PRO: You’ll pay lowered monthly payments due to the long duration of your loan. This provides you with better flexibility in case you go through any financial status changes over the years.
  • CON: You’ll pay more interest over time, since the total length of your loan is longer than average and gives more time for interest to accrue. 
  • CON: The longer you keep the vehicle, the more it will depreciate. However, a used car goes through slower depreciation than a new year.

Short Used Car Loan Terms

    • PRO: You’ll pay lower interest because your term length is shorter. If you go upside down on the loan, it will also be for a shorter period of time.
    • PRO: The car is paid off quicker and you don’t need to worry about making room in your budget for years upon years.
    • PRO: You have the option to refinance for better rates. Usually your credit rating will improve as you make prompt payments, which can pay off in better interest rates during your refinancing.
    • CON: Your monthly payments will be higher in a shorter-term loan. You can offset this cost with a higher down payment.
  • CON: There’s less room for error since your monthly payments are higher, so an unexpected expense can put you in a bind.

Find Out More with Rocky's Auto Credit

Ultimately, there is no right and wrong way to finance your used car. You just need to weigh the pros and cons along with your financial situation to find the right solution for you. But, Rocky's Auto Credit is here to help. Contact us to learn more about your options with our finance department.

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