How Long Does It Take to Pay Off a Car?

The basics of car loan terms

Let’s start by unpacking car loan terms and how they work. In the UK, car loan terms typically range from one to seven years. The length of the term will impact not only the duration of your payments but also the amount you pay each month and the total interest accumulated.

Short-term loans

Choosing a shorter loan term, such as one to three years, means you’ll face higher monthly payments, but you’ll pay less interest overall. This can be a smart choice if you can handle the larger monthly payments without putting pressure on your other financial commitments.

Long-term loans

On the other hand, a longer term will reduce your monthly payments but increase the amount of interest paid over the life of the loan. This can make monthly budgets more manageable but may cost more in the long run. How long does it take to pay off a car with a long loan? In general, loans that span between five and seven years are considered long.

Where do most Brits stand? The average car loan in the UK for new vehicles is 72 months (six years). Loans for used cars are slightly shorter and sit at around 67 months (over five years).

Deciding how quickly to pay off your car loan

How long does it take to pay off a car in the UK? Your financial situation plays a key role in determining how fast you can pay off your car loan. Consider these factors when deciding on your loan term:

Monthly budget

Carefully crunch your numbers and decide what you can afford to pay each month. Ensure this amount doesn’t stretch your finances too thin. You want to make sure you can comfortably handle your car payments while allowing room for other essentials and savings.

Financial goals

Think about your financial priorities when calculating how long it takes to pay off a car. Are you looking to clear all debts as quickly as possible, or do you need to keep your monthly expenses low to accommodate other financial commitments? This will help determine whether a shorter or longer repayment period is right for you.

Strategies to pay off your car loan faster

If your goal is to pay off your car loan early, here are some tried-and-tested strategies:

Top up your payments

If your lender allows, making voluntary overpayments can shorten the term and reduce the total interest paid over the life of the loan. Unexpected income streams such as bonuses or tax refunds can be a good place to start. Remember, even small extra payments can make a big difference when it comes to how long it takes to pay off a car.

Refinance your loan

Refinancing if interest rates have fallen or if your credit score has improved since you took out your loan can be an option. Switching to a lower rate or shorter term can help you pay off your car faster.

What if I struggle with payments?

If you find yourself struggling to keep up with car payments, don’t remain silent. Instead, reach out to your lender and chat to them about your financial difficulties. They may be able to adjust your repayment plan or extend the loan term to make it more manageable.

Find the perfect timeline with My Car Credit

All borrowers are different, which is why, at My Car Credit, a one-size-fits-all approach to loans doesn’t cut it. Instead, we carefully assess all applicants before matching them with a loan or lender. This means you can navigate your auto finance journey with confidence and pay off your loan according to your own timeline. Whether the road ahead is long or short, we’re here to help you reach your financial destination.

Your next dream car is closer than you think. Try out car finance calculator to get a breakdown of your expected monthly payments, typical rate and total payable.