Where Borrowers Are Taking Out the Longest Auto Loans

As the prices of new and used cars skyrocket, so, too, are average auto loan lengths. Since long-term auto loans can mean lower monthly costs, car buyers may favor or need the extra time to afford vehicle purchases.

But longer payment terms can cost buyers more money because of the accrued interest. Researchers look at loans closed on the LendingTree platform over the last three years to see where people take out longer car loans — and how average term lengths have changed.

Though auto loans for new cars tend to have longer terms, this data looks mostly at used cars based on the typical closed loan through the LendingTree platform.

Key findings

• Auto loans originated through the LendingTree platform over the past three years have an average term of 62.9 months. Florida car buyers take out the longest average car loans at the state level — 64.7 months, tied with Arizona — and metro level — four Sunshine State metros land in the top 10, led by No. 1 Jacksonville (66.4 months).
• Some of the highest-earning metros have the shortest average auto loan terms. San Francisco residents take out the shortest average loans at 60.2 months. New York City and Milwaukee tie for next to last at 61 months, on average.
• Hartford, Conn., has the highest rate of borrowers taking on extremely long loans — more than six years — at 14.7%. 13.3% of Charleston, S.C., buyers take on extra-long loans, while 12%, 11.7% and 11.7% of Phoenix, Tampa, Fla., and Atlanta residents, respectively, originate auto loans of more than six years.
• Average auto loan lengths dipped in 2020 before increasing significantly throughout 2021. Term lengths hit their lowest point in the past three years in November 2020 — 59.9 months, on average — and reached their three-year peak of 65.6, on average, in July 2021.
• The most common loan lengths nationally are 72 months (36.5%), 60 months (34.8%) and less than 60 months (19.2%). Just 7.8% of borrowers take on longer loans than six years.
• Tesla buyers take on the longest loan terms, at an average of 67.1 months. Buyers of Ram trucks follow at 66.3 months, on average, while Mini and Lexus buyers take out the shortest loans, at an average of 59.7 and 60.4 months, respectively.

Florida auto borrowers in for the long haul

In the past three years, consumers closing out auto loans on the LendingTree platform financed their vehicles for an average of 62.9 months — or just more than five years. But in some metros, buyers are tacking on as many as 3.5 months onto that average.

Florida metros lead the charge, with Jacksonville car buyers taking out the longest average car loans at 66.4 months. Tampa follows closely, with borrowers financing for an average of 65.3 months. Two other Florida metros — Orlando and Miami — join the top 10 metros where consumers take out the longest average auto loans.

At the state level, Florida ties with Arizona for the longest average auto loans at 64.7 months. Southern states dominate the rankings of states with the longest average auto loan terms. Six other states — Maryland, Louisiana, South Carolina, Arkansas, Georgia and West Virginia — join Florida from the South among the 11 states with the highest average loan terms.

Residents of major metros take out shorter auto loans

The metros that take out the shortest average auto loans vary more regionally than those with longer loans, but some commonalities occur.

Residents in major business hubs appear to take out short auto loans, as San Francisco records the shortest average auto loans at 60.2 months, while New York City and Milwaukee follow closely at 61.0 months, on average.

Motor City and Silicon Valley — that’s Detroit and San Jose, Calif. — come next with average auto loans of 61.1 and 61.2 months, respectively.

Higher incomes could play a factor in these shorter auto loan terms, as several of the shortest-borrowing metros like San Francisco, San Jose and Seattle have some of the highest median incomes in the country.

LendingTree senior autos writer Jenn Jones explains that those with more cash for a bigger down payment or monthly payment can wind up saving on interest down the road. If they can afford higher monthly payments, they’re likely to take the better option of a shorter loan term.

Where longer loans are more common

While the average auto loan across metros analyzed sits at just more than five years, some metros have notable shares of auto borrowers who finance their vehicles for longer than six years.

Across the 48 metros, an average of 7.6% of borrowers took out auto loans with terms longer than six years, but that share nearly doubled in Hartford, Conn. (14.7%).

Auto borrowers in Charleston, S.C., take out extra-long auto loans at the next highest rate (13.3%), followed by Phoenix at 12.0%.

Loan terms longer than five years are much more common among the metros analyzed, with an average of 46.2% of borrowers financing for over five years. In eight of those metros — including all four Florida metros with the longest average auto loan terms — more than half of auto borrowers took out loans with terms longer than five years.

Average loan terms were getting shorter before 2021

The coronavirus pandemic has sent shockwaves throughout the autos industry, quickly driving up prices for new and used cars. Consumers may be responding by taking out longer auto loans along with looking for older cars and bigger loans, as LendingTree reported earlier this year.

Throughout 2019, consumers financed vehicles for an average of 62.8 months, then got slightly shorter loans — 61.1 months, on average — throughout 2020. But through the first 10 months of 2021, auto loan terms have averaged 64.6 months, peaking in July, when terms averaged 65.6 months. November 2020 was the only month in three years to see average auto loan terms drop below 60 months, but just down to 59.9.

The most popular loan term for borrowers through the LendingTree platform since 2018 is 72 months, or six years, with 36.5% of borrowers financing for this term. But the share of 60-month auto loans is only slightly smaller at 34.8%. Only 7.8% of loan terms are 73 months or longer, while a notable 19.2% of auto loan terms are shorter than 60 months.

How auto buyers finance different car makes

Auto loan terms vary across different makes of cars, with average loan terms for 14 car makes exceeding the overall average (62.9 months). Tesla buyers take out loans with the longest terms, 67.1 months on average.

Those financing Ram trucks come close with an average loan term of 66.3 months. The only make with an average loan term below 60 months is Mini, at 59.7.

Speed out of auto debt

The right auto loan terms depend on an individual’s financial situation and lifestyle. A shorter auto loan term will help you save money in the long run. But if it comes with an unaffordable monthly payment, you can get into a more troubling financial situation.

If you can’t get a shorter auto loan term when buying a car, use these tips to accelerate your debt payoff.

• Make a larger down payment. It might mean waiting a little longer to shop for a car, but more cash upfront means a smaller auto loan — and a better shot at qualifying for a short-term loan. Despite attractive seasonal sales, Jones says “the best time to buy a car is before you absolutely need one, because you don’t want to be in a rush.”
• Increase your monthly payments. Putting extra money toward the principal on your auto loan will help reduce the overall interest you would otherwise pay over the life of the loan. Just make sure your loan doesn’t have prepayment penalties.
• Refinance to a shorter-term loan. If you’re already paying back an auto loan with a longer term than you’d like, you have the option to refinance to a shorter loan term. Use LendingTree’s auto loan refinance calculator to help determine if a refinance is right for your situation.

Methodology

Analysts reviewed a sample of more than 29,000 auto loans that closed between Oct. 12, 2018, and Oct. 12, 2021, from consumers who were matched to their lender on the LendingTree platform.

Average loan lengths and the percentage of loans with terms of more than 60 months and the percentage of loans with terms of more than 72 months were aggregated to 48 of the largest metros in the U.S.

Analysts also calculated loan lengths by purchased auto make and nationally. Auto loans were limited to cars and light truck purchases. Researchers didn’t include analysis of metros or makes where samples were too low.