Deciding on the length of your agreement

Everything you need to know about choosing the length of your finance agreement.

Deciding the length of your plan is dependent upon lots of different factors, read on or watch our video to understand the ins and outs of the things you should consider when fixing your term.

Choosing the length of your car finance term

Your finance term is the period over which you’ll spread your repayments, which for most people tends to be between 2 and 4 years, but there are a variety of things to consider when you are choosing the right options for you.


Here are a few things you should consider when deciding on the length of your finance agreement:

  • What can you afford to pay monthly?
  • Are you likely to have any major outgoings over the next few years that might affect how long you’d like to pay for a car on finance?
  • Are you likely to be in paid employment throughout the duration of the contract?
  • What’s your expected annual mileage?
  • At what point will it be cost effective or desirable to upgrade to a new model?

If you’re still not sure, we’ve had a look at the pros and cons of both options to help you make the best choice for you.

Shorter Term Plans

Driving the latest model keeps you up to speed with improvements in performance and a whole range of rapidly changing technology. So whether you want parking sensors, side air-bags, or just greater fuel efficiency, with a new car, you can be sure you’ve got the very best.

You’ll also benefit from the peace of mind that comes with a new car warranty, as well as potentially being more reliable than an older model.

The downside of shorter term plans this is that your monthly payments will invariably be higher. With that in mind, it’s important to be realistic about what you can afford each month, rather than just focusing on the long term overall costs. 

Longer Term Plans

Sticking with the same car for longer has its benefits too. For instance, it can help to minimise the effects of depreciation, with rates of around 50% over the first 3 years.

However, it’s important to always balance depreciation with maintenance costs, as these can rise significantly after about 30,000 miles, when many warranty periods end.

For more information on car depreciation, please click here.

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