How Long Can You Finance a Used Car?

If you’re shopping for a pre-owned vehicle in the Minnetonka area, you might be wondering, “How long can I finance a used car?” The average auto loan term is 60 to 72 months. There are some restrictions on how long you can finance a car, and your car loan length will depend on how much you can afford to pay on a monthly basis. So, how long can you finance a used car? Learn about your financing options and the pros and cons of longer and shorter loan terms in this guide from the finance team at Motorwerks MINI in Golden Valley.

Maximum Amount of Time to Repay a Car Loan

While there is no set limit on the maximum amount of time to repay a car loan, there are a few guidelines that banks follow. For example, some banks have a policy on used cars that prevents buyers from financing vehicles over seven years old and with over 100,000 miles on their odometers. It’s best to contact your preferred lender and ask about their restrictions on used car financing before taking the next step. 

What Are the Pros & Cons of Short-Term Loans?

Short-Term Loan Pros:

• Low-Interest Expenses: A shorter loan term will come with a higher monthly payment, but you’ll pay less interest over time. 
• Faster Pay-Off: The higher monthly payment will allow you to pay off the loan faster. 
• Refinancing: If your credit score is strong you may have the opportunity to refinance your loan later down the road. Generally, it’s easier to do this with a short-term loan, because your loan will spend less time being upside down. 

Short-Term Loan Cons: 

• Higher Monthly Payment: The higher monthly payment of a short-term auto loan could have a negative impact on your budget. Make sure that you are financially able to meet your monthly payment obligations. 

What Are the Pros & Cons of Long-Term Loans?

Long-Term Loan Pros: 

• More Affordable Monthly Payment: A longer loan term allows you to pay less every month, so you’ll have some leeway if your financial situation changes at any point. 

Long-Term Loan Cons: 

• Higher Interest: Long-term loans come with higher interest rates. The longer the loan term, the more interest accrues. 
• Vehicle Depreciation: Cars depreciate over time, although depreciation rates slow down as a car gets older. That being said, the longer the length of the auto loan, the more time your car will spend as “negative equity.” This is when the car’s cash value is less than the balance of the loan. 

Finance Your Next Used Car at Motorwerks MINI! 

Now that you know the answer to the question, “How long can I finance a used car,” are you ready to finance a pre-owned vehicle? You can start the purchasing process from the comfort of your home when you apply for financing with us online. Make sure to check out our used vehicle specials to find some of the best deals in the St Louis Park and Minneapolis area. Meanwhile, take a look at our guide on what to check when buying a used car, and feel free to contact us if you have any questions. Explore our impressive selection of pre-owned cars for sale at Motorwerks MINI. Our finance team will help you secure reasonable rates and terms on your auto loan. In the meantime, kickstart the process by applying for financing online, then use our payment calculator to figure your estimated monthly payment into your budget.