A car loan or lease should ideally be for less than how many months?

The ideal length for a car loan or lease being less than 36 months is rooted in the financial principle of minimizing interest costs and managing monthly payments effectively. Loans with shorter terms generally result in lower total interest payments over the life of the loan compared to those with longer terms. This is because interest accrues over time, so a shorter repayment period allows you to pay off the loan more quickly, reducing the amount of interest paid.

Additionally, shorter loan or lease terms often lead to higher equity in the vehicle sooner and help prevent the driver from owing more than the car’s value, a situation known as being "underwater." When a loan is structured for 36 months or less, it tends to encourage a more responsible purchasing decision, aligning better with the depreciation of the vehicle as new cars typically lose value rapidly during their first few years.

Longer terms, such as 48 months or beyond, can lower your monthly payments but generally result in a greater total cost of borrowing. This suggests that choosing a loan or lease term of less than 36 months aligns with both financial prudence and better vehicle ownership experience.