What's the Best Loan Term for Second Hand Cars?

Are you thinking of getting your own set of wheels? You can consider buying a second-hand car. Doing so will allow you to enjoy the freedom of driving your own car without having to pay a high monthly repayment amount. A used car is a lot more affordable than a new vehicle. And if you can find a good one that still looks great and performs well, then it’s as good as buying a new car. But what’s the best loan term for a second-hand car? 

What’s the Average Car Loan Term?

In the past years, car payments have reached amounts as high as £400 per month. What this tells us is that car buyers now prefer more expensive vehicles. It’s also undeniable that the prices of vehicles today are on the rise. Faced with this reality, car buyers cope by taking out longer car loans. 

On average, the car loan term is 54 months or 4 and a half years. The longest possible car loans are ones that stretch over the next 84 months or seven years, however we wouldn't recommend it. Even if used cars are much cheaper than new ones, car buyers still find that they need a longer time to pay off their car loans. 

Car buyers try to balance things off by looking for the best interest rate while also getting an affordable monthly repayment amount. Many of these people find that even a five-year contract term for car loans is too expensive for them. This is why they choose terms of six or seven years since the monthly repayment is cheaper, even if it’s actually costing them more money in the long run. 

Why a Short-Term Car Loan is Better

With car loans, you need to think about the contract term that you should get before signing the agreement. If you want an affordable monthly repayment amount but also want to finish paying off the loan fast, then consider getting a second-hand car. Since it’s cheaper than a new one, you can expect to have lower monthly repayments. Here are other reasons why a short-term car loan is better than a longer one. 

You Can Own the Car Faster

Since it’s a short-term car loan, you don’t need to wait too long for the car to be yours. If you can get a three-year loan, for example, then you’ll be out of debt faster than if you get a 60-month car loan. When the car is yours, you can then move forward to other goals like buying property. 

Spend Less on Interest

With a short-term car loan, you won’t be paying a lot of interest compared to long-term loans. You’ll also get better rates of interest if you choose a shorter loan term. Many lenders reduce the interest rates for borrowers who choose short-term loans. Overall, the cost of a second-hand car will be even lower. If you want to save as much money as possible, consider getting a shorter car loan term. 

Higher Resale Value for New Cars

Some car buyers sell their vehicles once they pay off their car loans. Maybe you’re planning on doing the same. You can enjoy a higher resale value for your car if you get a shorter car loan term. If your car loan term is only three years, then your car is still relatively new. And if you’ve taken care of it and its performance is superb, you can definitely sell it fast at a good price. 

When Should I Choose a Longer Car Loan Term?

Expect higher monthly repayments if you choose a short-term car loan. Again, the upside is you’ll finish paying off the loan fast. However, if you want a cheaper repayment amount, you can choose a longer car loan term. For example, you badly need a car, but your budget is tight. A long-term car loan would be more beneficial to you. 

You can still enjoy an adequate budget because your loan repayments won’t be taking up a lot of your funds every month. A longer contract term on a used car means the repayment amount every month will be much lower. And of course, you get to have your own car that you can conveniently use for work or your business. 

Long-term and short-term car loans have their own pros and cons. Generally, short-term car loans are better for car buyers because the overall cost of the car and the interest rates would be lower. A three-year car loan term is ideal but a five-year term is not bad either. Check for cars that you can get for a five-year car loan term or less. 


When thinking about getting a car loan, there are a number of factors that you ought to take into consideration. Some of these factors include the price of the car, the interest rate for the car loan, the contract term, and your financial situation. Evaluate your finances and be realistic about what you can afford. 

If you can’t afford the monthly repayments yet, consider saving money for now, so you can pay a considerable down payment or deposit for the car when you’re ready to make the purchase. Doing so will result in lower monthly repayments. 

It’s better to put off buying a car than finding out later on that you can no longer afford to pay for it. Remember that not being able to keep up with the payments will affect your credit score negatively. And if you have a low credit score, you will have a harder time getting good deals from lenders in the future. 

If you want to know more about other tips on car buying, car finance deals, and car loans, be sure to check other helpful and informative articles on our blog! Here's an article that discusses one of the greatest fears of a used car buyer,  My Car is On Finance and My Engine Has Blown