Definition
A loan term is the length of time you have to repay a loan, typically expressed in months. Common auto loan terms are 36, 48, 60, and 72 months. A shorter term means higher monthly payments but less total interest; a longer term lowers your payment but costs more overall.
Example
On a $25,000 auto loan at 6% APR, a 48-month term produces a monthly payment of about $587 and total interest of $3,182. Stretching to 72 months drops the payment to $414 but increases total interest to $4,831 — you pay $1,649 more over the life of the loan.
How It's Calculated
The loan term directly feeds into the standard payment formula: Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where n is the total number of monthly payments (loan term in months), P is the loan amount, and r is the monthly interest rate.
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