How Long Should Your Car Loan Term Be?

72-month loans are increasingly common, but are they right for you? We explore the pros and cons of different loan terms.

Car Network Canada Team May 22, 2025 1 min read Auto Finance

Loan terms in Canada typically range from 12 to 84 months. Choosing the right term is a balancing act between affordable monthly payments and total interest paid.

Short-Term Loans (12-48 months)

Pros:

Lower total interest paid
Build equity faster
Own the vehicle sooner

Cons:

Higher monthly payments
May limit vehicle options within your budget

Long-Term Loans (60-84 months)

Pros:

Lower monthly payments
Access to more expensive vehicles
Easier to fit into monthly budget

Cons:

Significantly more interest over the life of the loan
Risk of being "upside down" (owing more than the car is worth)
May still be making payments after warranty expires

The 20/4/10 Rule

A common guideline suggests:

20% down payment
4 years maximum loan term
10% of gross monthly income on total vehicle costs

While this is ideal, it's not always realistic. The key is finding a term that balances affordability with reasonable total cost.

Our Recommendation

For most buyers, a 48-60 month term offers the best balance. Use our loan calculator to compare how different terms affect your payments and total cost.

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