How Long Can You Finance a Used Car?

Gray 2021 Honda Accord Parked in Driveway

If you’re interested in a gently used vehicle in Carmel, you might be asking, “How long can I finance a used car?” The average auto loan term for a used car is somewhere between 60 to 72 months, and it keeps going up as car prices increase. Still, there are few restrictions on how long you can finance a car and the length of your auto loan will ultimately depend on how much you can afford to pay per month. Learn more about financing a used car below from Penske Honda’s finance team!

Financing a Used Car

While there’s no set limit on a used car loan, most lenders often place their own limits on the length of a loan term. Many banks limited used car loans to seven years and more than 100,000 miles. Some banks around %target_city_2%% have a policy against financing vehicles over seven years old and over 100,000 miles on their odometers. Be sure to check with your preferred lender to ask about restrictions they may impose on financing a used car in the Westfield area, so you can explore all of your options before making a decision. Compare the pros and cons of a short-term and long-term loan, below. 

Pros & Cons of Short-Term Loans

Short-Term Loan Pros:

  • Low-Interest Expenses: In the long run, you’ll pay less interest on a shorter-term auto loan. 
  • Faster Pay-Off: Your higher monthly payment will help you repay the loan faster. 
  • Refinancing: If you desire (and qualify), you can always refinance your loan later.

Short-Term Loan Cons: 

  • Higher Monthly Payment: The shorter the loan term, the higher the monthly payment. Make sure a higher monthly payment works with your Westfield budget and won’t strain your finances. 

Pros & Cons of Long-Term Loans

Long-Term Loan Pros: 

  • More Affordable Monthly Payment: When you choose to go with a longer-term auto loan, you’ll get to pay less every month than you would with a short-term loan. Plus, you can always pay higher payments to repay your loan faster.

Long-Term Loan Cons: 

  • Higher Interest: Long-term auto loans have higher interest rates, and the longer the loan term, the more interest you’ll pay in the long run. 
  • Vehicle Depreciation: Cars depreciate over time, but depreciation rates slow down on most cars as they age. So, the longer the loan length, the more risk you have of getting into a negative equity situation, which is when a car’s value is less than the balance remaining. 

Finance a Used Honda or Other Model in Indianapolis Today 

Whether you’d like to finance a used Honda or one of another brands, Penske Honda has a carefully handpicked selection available near Noblesville. Find your favorite model today!

 

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