How long to finance? It depends...

The length of your loan term, along with your interest rate, will dictate how much you will end up paying for the car you want. Because of this, it is vital that you look at total cost, and not choose a more expensive car simply because you might be able to spread your loan term across a longer period of time. Your monthly payments are actually less important than considering the total cost of your car and how long it will take you to pay it off. But, how long to finance a car will depend on your financial situation, the car you want, and a number of other factors.  

In years past, it was unheard of to have a car loan that lasted six years or longer. But today, it has become more and more common for people to choose loans that exceed five years. The reason for this increase is because people want monthly payments that they can afford on the car that they want. But oftentimes, at the end of a sale, with taxes, fees, add-ons, and interest rate calculated into the total price of the car… the amount that the buyer originally intended to spend is increased significantly.

So, in order to buy that same car, the car buyer may opt for a longer-term loan to reduce the monthly payments. But this is probably not to the buyer’s benefit. Though the monthly payments on a long car loan term may seem more manageable, perhaps would be better to choose a car that is more affordable, and a loan that can be paid off quicker.