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What's The Longest You Can Finance a Car Loan In Canada?

What's The Longest You Can Finance a Car Loan In Canada?

With cars becoming more expensive all the time, we are all having to borrow more to pay for them. That means either higher monthly payments or longer terms. Many of our customers choose the longer term, but how long can a car loan be for? What’s the maximum car loan length in Lincoln, Ontario?


Let’s find out!


Not all that long ago, auto loans were for 3-5 years. As auto loans are expressed in months, that was 36 to 60 months. With the price of cars increasing steadily, those terms are increasing to 6, 7 or even 8-year terms.

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What's The Longest You Can Finance a Car Loan?

The longest you can finance a car loan in Canada is currently 96 months. That’s 8 years. We’re sure you could go longer if you really needed to but we certainly wouldn’t recommend it. Also, you can generally only access 96-month car loans if the car is up to a couple of years old.


The same goes for 84-month car loans, the car can only be up to around 4 years old. The longest you can finance a car loan older than around 6 years is 60 months.


If you need a car loan for longer than 8 years, you cannot afford the car. It’s that simple.


Pros & Cons of Long Car Loans

As always, there are pros and cons of going longer on a loan.


Pros of Longer Auto Loans

  • Lower Monthly Payments: This is the obvious benefit of going long. Being able to borrow a new car while keeping things affordable.


  • Buy a Better Car: Borrowing more means more to spend. Whether that’s going crazy with the options list or buying a prestige car instead of a mainstream brand, you have a lot more choices.


  • Buy Hybrid or Electric: If you want to embrace green motoring, you’re going to pay for it, at least at first. Electrics and hybrids currently cost a premium, which you’re going to have to pay for somehow.


Cons of Longer Car Loans

  • Pay more in interest over the term: Auto loan interest is calculated yearly and applied daily. The longer the term, the more interest you’ll pay. Even if the rate is lower, you’ll be paying that rate for longer.


  • Depreciation: Buying a new car involves depreciation. It’s just how it is. Keep the car and it’s a non-issue. Plan to sell or trade in the car within a year or two and it might be an issue.


  • A lot changes in 8 years: Life, technology, car design, and the world will all change a lot in 8 years. All while you’re driving the same car or paying off the same car loan.


There is absolutely nothing wrong with using a long car loan to buy the car you want to buy. As long as you appreciate there are upsides and downsides to such a deal, you can spend your money as you wish and buy whatever car you want to buy.


What's The Best Car Loan Length?

There isn’t an ideal auto loan term. We usually advise clients to always go for the shortest possible term with the most affordable monthly repayments and lower interest rates possible.


This may limit your options but it balances the need for money for a new car with the overall expense of a longer-term auto loan. If you need to borrow more and don’t mind paying the interest, then a longer loan is obviously okay.


If you’re more interested in avoiding paying interest as much as possible, a shorter loan with higher monthly repayments is the way to go.


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