Average car loan length by year
According to 2026 Experian data, the average car loan term is 69.5 months for new vehicles and 67.9 months for used vehicles. Average term lengths have steadily increased over the past few years for both new and used vehicles. For new vehicles, the average term was 68.93 months in 2025 and 68.45 months in 2024. For used vehicles, the average term was 67.23 months in both 2025 and 2024.
The table below compares current loan averages among new and used vehicles:
| Loan type | Average loan term | Average loan amount | Average monthly payment |
|---|---|---|---|
| New car | 69.5 months | $43,610 | $765 |
| Used car | 67.9 months | $27,852 | $542 |
Longer loan terms may reflect rising vehicle costs and interest rates in recent years, as borrowers extend terms to afford monthly payments. For reference, average new vehicle costs have increased 4% from 2025 to 2026, while costs have increased 3% for used cars.
Average interest rates have stabilized or dropped slightly following a sharp spike between 2022 and 2023. Rates are currently 6.35% for new vehicles and 11.19% for used vehicles.
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Average car loan length by credit score
Credit scores indirectly affect average car loan terms. Because borrowers don’t control the interest rates they are offered based on their credit score, they may extend loan terms to reduce their monthly payments. However, note that lenders often increase the APR on longer loan terms, so you’ll pay more in interest even with a lower payment.
According to 2026 data from Experian, individuals with super prime (or excellent) credit have the lowest average loan terms among all credit tiers. For new vehicles, the average loan term was eight months shorter for super prime borrowers (64.88 months) than for prime borrowers (72.43 months). Near prime borrowers had the highest averages at 75.57 months.
For used vehicles, loan term averages did not differ significantly across credit tiers. Super prime borrowers had the lowest average at 66 months, while prime borrowers had the highest at 68.91 months.
Here’s a breakdown of average financing terms based on credit tiers:
| Credit tier | New car term length (months) | Used car term length (months) |
|---|---|---|
| Super prime (781 to 850) | 64.88 | 66 |
| Prime (661 to 780) | 72.43 | 68.91 |
| Near prime (601 to 660) | 75.57 | 68.88 |
| Subprime (501 to 600) | 74.91 | 67.32 |
| Deep subprime (300 to 500) | 73.67 | 66.09 |
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Car loan term lengths explained
Car loan terms are typically available for 24, 36, 48, 60, 72, 84 or 96 months, though the most common terms are 60 and 72 months. However, lenders may not offer 72- or 84-month terms on higher-mileage used vehicles because of the greater financial risk from rapid depreciation.
Why longer term lengths are becoming more common
Beyond higher vehicle costs, several other factors influence longer loan terms. One factor is elevated interest rates, which directly impact monthly payments. For reference, average monthly payments in 2026 are $765 for a new vehicle (up from $749 in 2025) and $542 for used (up from $532 in 2025).
Another factor is inflation in general. Rising prices on needs like groceries and gas leave less room in the household budget for loan repayments. At the time of publishing, the U.S. inflation rate was 3.7% overall, while fuel costs alone spiked 34.2% from the previous year.
Pros and cons of different car loan lengths
Longer terms mean lower monthly payments, but they come with major drawbacks — you’ll pay more interest over the life of the loan. In addition, longer terms increase your risk of going underwater on a car loan (owing more than it’s worth). One way to reduce this risk is to make a down payment of at least 20%.
A longer term can work if you have a strong rate, a solid down payment and plan to keep the vehicle well past the payoff date.”
The table below outlines an example of the financing terms for a $43,000 new vehicle loan at 11.4% interest with $0 down payment:
| Term length in months | Monthly payment | Total interest paid | Underwater risk | Best for |
|---|---|---|---|---|
| 36 | $1,515 | $8,530 | Very low | Excellent credit; healthy monthly cash flow |
| 48 | $1,198 | $11,494 | Low | Good credit; may plan to trade in vehicle sooner |
| 60 | $1,010 | $14,590 | Moderate | Most borrowers |
| 72 | $885 | $17,710 | High | Average to bad credit but offering a significant down payment (20% or more) |
| 84 | $798 | $21,022 | Very high | Average to bad credit who are working to pay off other debts and need lower monthly payments |
We spoke with Steven Cegelka, chief operating officer at Ignition Dealer Services, who noted that negative equity in a vehicle can create problems for the borrower, especially after an accident. Cegelka stated: “If a car is totaled while you’re upside down on a long loan, the valuation becomes everything. If the insurance company comes in low, that shortfall can create a much bigger problem for you.”
However, longer loan terms aren’t always a bad thing and can actually help you achieve your financial goals in some cases. Cegelka advised that “a longer term can work if you have a strong rate, a solid down payment and plan to keep the vehicle well past the payoff date.” Cegelka says to avoid lengthy terms if you trade vehicles every few years and have to keep rolling in negative equity to the new loan.
FAQ
What is the average monthly car payment in the United States?
The average monthly car payment is $765 for new cars and $542 for used cars, according to Experian.
What is the $3,000 rule for cars?
The $3,000 rule is a guideline suggesting you have at least $3,000 saved before you buy a vehicle. You can use it as a down payment or set it aside for future maintenance costs.
What is the best way to finance a car?
The best way to finance a car is to put down at least 20% of the cost and keep the term no longer than 60 months. This strategy keeps the monthly payment low while avoiding negative equity.
What are the typical interest rates for auto loans in 2026?
Average rates range from 4.41% to 16.11% for new vehicles and 6.29% to 21.62% for used vehicles.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this guide include:
- TransUnion LLC, "TransUnion 2026 Originations Forecast Shows Continued Positive Momentum Amidst Moderate Expansion." Accessed Oct. 16, 2026.
- Kelley Blue Book, "Average New Car Price Nears All-Time High." Accessed Oct. 16, 2026.
- Experian, "State of the Automotive Finance Market Report: Q2 2026." Accessed Oct. 16, 2026.
- Edmunds, "How Long Should My Car Loan Be?" Accessed Oct. 16, 2026.
- U.S. Bureau of Labor Statistics, "Consumer Price Index Summary." Accessed Oct. 16, 2026.
