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How long is the average car loan?
I was thinking of getting a car loan, and just out of curiosity, I wanted to know what the most common length for a car loan is.
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
According to studies from 2020, the average length of a
car loan
in the United States is 70.9 months, marking the highest average since data has been compiled.This length is a far stretch from the advice of personal finance experts, many of whom recommend a 48-month car loan as ideal and a 60-month car loan as acceptable.
While choosing a longer loan term gets you lower monthly payments, there are some serious drawbacks to taking out a loan longer than 60 months:
- Higher interest rates overall
- More interest paid over the life of the loan
Therefore, you should shoot for 48 months or 60 months and be prepared with a down payment of 10% to 20%, if you can afford it.
One thing that people also overlook is that you need full coverage
car insurance
for the duration of the loan. The longer your loan term is, the longer you’ll need to pay for a potentially expensive policy.Whether your loan is 48 or 72 months, you should shop around for new car insurance quotes every six months to make sure you’re not overpaying.
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- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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