Last year, Experian Automotive released their data on the lengths of automobile loans. Both new car loans and used car loans reached record highs, with new cars averaging 67 months and used cars averaging 62 months. So how long should your car loan be?
Why Are Car Loans Longer?
It’s probably worth looking at the reason for the increase in car loan terms, and the primary reason is cost. New car prices have increased 4.5 percent over just the last year, making the new average new car cost around $29,000.
Is this affordable? Well that depends. Here’s a quick comparison of monthly payments based on length of the car loan (no money down, interest rates may vary by location and credit standing):
| Term | Interest Rate | Monthly Payment | Total of Payments |
| 36 months | 2.00% | $830.63 | $29,902.85 |
| 48 months | 2.30% | $632.96 | $30,382.22 |
| 60 months | 2.40% | $513.40 | $30,803.75 |
| 72 months | 2.75% | $437.38 | $31,491.41 |
The differences are pretty significant.…