What Is The Maximum Car Loan Term?

Find out how long you can take to repay your car loan with Savvy.

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, updated on July 5th, 2023       

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Car loans are a great way for buyers to spread their payments out over an extended period to ensure they’re comfortable with managing the debt. As such, you might be looking for the maximum available car loan term to help you do just that, which you can find out more about right here with Savvy.

Learn all about long-term car loans, how they work and what the longest car loan you’ll be able to take out for your situation will be. Read more with us today before you start the car loan application process.

What is the maximum term I can choose for my car loan?

In almost all cases, the maximum term available for a car loan is seven years (or 84 months). Most lenders will enable customers to space out their repayments over such a timeframe, which can benefit borrowers by reducing the value of their ongoing instalments. For example, while a $50,000 car loan at 7.5% p.a. would cost $1,001.90 per month over a five-year term, repayments would only set you back $766.91 if you extended it to the maximum seven-year term. It's important to note, however, that the longer your loan term, the more you’ll pay overall. You’d save more than $4,300 overall on that five-year term compared to seven, for instance.

Another point to consider is that the maximum term for one person may be completely different to that of another. There are many factors which shape your approval chances when applying for a loan which can impact the type of loan you can afford or are considered eligible to receive. Some of these variables include:

  • Your credit score: the better your credit record, the more inclined a lender will be to entrust you with a larger, longer-term car loan. Individuals who’ve struggled more with credit in the past will be considered a greater risk and will be far less likely to be approved for a loan with a longer term.
  • Your income and employment stability: the more you earn and the more stable your employment and income, the more willing a lender will be to entrust you with a loan at the maximum term. For example, a car loan for a student working casually is likely to be smaller and shorter than one approved for a teacher with ten years in the same job.
  • The size of your loan: lenders won’t allow small car loans to be stretched out over the maximum term. For instance, a $10,000 loan is highly unlikely to be able to be spread out over seven years, while a $70,000 loan would be a better candidate for the maximum term.
  • The age of your vehicle: the maximum term length of used car loans can also vary. If your lender is only willing to finance vehicles up to ten years old and your ideal car is seven years of age at the point of sale, you may find you’re limited to a three-year loan term in this case.

There are select lenders in the market who can offer ten-year car loans in Australia. However, they’re extremely rare and unlikely to be the best option for you, given the increased outlay required for a ten-year loan compared to a 48, 60 or 84-month agreement. Savvy is partnered with a wide range of reputable lenders from around the country to help our customers lock in the best deal, so you can do just that when you get a quote and apply with us.

Is there any way to extend my car loan beyond the maximum term?

Yes – you can extend the term of your agreement by refinancing your car loan. This involves taking out a new loan to pay off the remainder of your current loan, therefore replacing your monthly repayments with those of a better deal. However, many car buyers use the refinancing process to extend their loan terms. In most cases, this is to reduce their ongoing repayments, thus making them easier to manage month to month. If you’re five years into your seven-year car loan and decide to refinance, you could find a lender willing to enable you to repay your remaining debt over five years, rather than two. In this situation, you would’ve extended your loan beyond its original maximum term.

However, as mentioned above, doing so will cost you more over the life of your loan and won’t always be the best option for you. In the long term, it’s always better to choose a shorter term with higher repayments (such as 48 or 60 months) than a longer term with lower repayments. However, above all else, you should feel comfortable with your loan repayments, so a long-term finance agreement may be the best option for you to help you manage your debt alongside other ongoing expenses.

Common queries about long-term car loans

How much can I borrow for my car loan?

The amount you’ll be able to borrow to purchase a car will be decided by several factors (some of which have already been discussed). These include:

  • The nature of your employment
  • Your income and how consistent it is
  • The value of your vehicle
  • Your credit score
  • Your record repaying similar loans
  • The condition of your car (used car loan term lengths may be shorter than those for new vehicles)
How do I calculate the cost of my long-term car loan?

It’s easy to work out the costs of different car loans by using Savvy’s car loan repayment calculator. You can use this simple tool to calculate the costs of different long-term loans and see how much each might cost on a monthly or otherwise ongoing basis. Car loan calculators are highly valuable to use before commencing the application process.

What is the maximum term for an unsecured car loan?

Like most standard car loans, unsecured car finance can be repaid over between one and seven years. However, this type of finance is unsuitable for most vehicle purchases, as it’s considerably more expensive in terms of interest and fees. The main use for this type of loan is when your car doesn’t meet your lender’s criteria in relation to age and/or condition, otherwise secured finance will be the best option for you.

Can I take out a long-term car lease instead?

Car leases are typically only available to business owners leasing vehicles for commercial purposes. However, you may be able to take out a novated lease for your vehicle, which involves a three-party agreement between you, your leasing company and your employer whereby you salary sacrifice to make your lease payments. These agreements generally run for up to five years, but you may be able to refinance your residual to extend it.

Will I be approved for a maximum-length car loan if I’ve never borrowed before?

Probably not – seven-year car loans are generally reserved for borrowers taking out large car loans and who have a verifiable history of successfully repaying similar finance previously. If you’ve never borrowed before, you won’t have a credit history to draw upon, meaning you may not be approved for the maximum available term length. However, if you can show that you're comfortably able to afford your repayments across the loan term through stable income and employment, you may stand a better chance of approval for a seven-year term.

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