Rising vehicle prices, elevated interest rates and persistent affordability pressures are pushing more car buyers to stretch their auto loans to record lengths, locking many into debt well beyond what experts have traditionally recommended.
Financial advisers have long warned against extending car loans beyond five years, arguing that vehicles depreciate quickly and should be paid off before they lose significant value. Yet that guidance is increasingly at odds with reality. Today, it is common for buyers to still be making payments on a car seven years after driving it off the lot.
According to data from Edmunds, more than one in five auto loans now run for seven years or longer, a record high. Average loan terms have also steadily increased. In the fourth quarter of 2025, new-car buyers took out loans averaging 69.6 months, while used-car loans averaged 70.1 months.
Experian, another major source of auto finance data, reports similar trends. In the third quarter of 2025, nearly 70% of new-vehicle buyers who financed their purchase opted for loan terms longer than five years. A growing share chose loans lasting six or seven years, with some extending even further.
The shift has been gradual but persistent. A decade ago, new-car loans averaged 67.8 months and used-car loans 66.5 months. Today, both are hovering close to 70 months, reflecting a long-running move toward longer repayment periods as buyers try to cope with higher prices.
On the surface, longer loans can make expensive vehicles seem more affordable. Dealership conversations often focus almost exclusively on monthly payments, and extending the loan term can reduce that figure significantly. For buyers facing stretched household budgets, the lower monthly bill can be the deciding factor.
But there is a clear trade-off. The longer the loan, the more interest the borrower pays over time, driving up the true cost of the car.
Consider a buyer purchasing a new vehicle priced at $50,000, roughly in line with today’s average new-car prices. With a $5,000 down payment and a fixed interest rate of 7% on the remaining $45,000, a five-year loan would result in monthly payments of about $891 and total interest of roughly $8,463. Over seven years, the monthly payment falls to around $679, saving about $212 a month. However, total interest jumps to more than $12,050, raising the overall cost of the car by nearly $3,600.
For many households, that extra cost is the hidden price of affordability.
Interest rates on auto loans are often closely tied to credit scores, meaning borrowers with weaker or limited credit histories can face even higher rates and steeper long-term costs. Longer loans also increase the risk of becoming “underwater,” owing more on the loan than the car is worth. That situation can make it difficult to sell or trade in a vehicle without paying extra out of pocket and can lead to financial losses if the car is totaled or stolen.
Financial planners warn that these risks can weigh on household finances for years. A lower monthly payment may feel manageable today, but the obligation lasts longer, leaving less flexibility if income drops, expenses rise or life circumstances change.
Experts recommend that buyers carefully calculate the total cost of a car before committing to a longer loan, not just the monthly payment. It is also important to consider how long the vehicle will be kept and whether the payment would remain affordable in a less favorable financial scenario.
If stretching the loan term is the only way to qualify for financing or afford the payment, that may be a sign the car is out of budget. In such cases, advisers suggest considering a less expensive model, choosing a used vehicle, or saving for a larger down payment to reduce the amount borrowed.
While longer auto loans can make higher-end cars accessible in the short term, they often come at the expense of higher overall costs and increased financial risk. For many buyers, the safer path may be resisting longer loans and instead lowering expectations—or paying more upfront—to protect long-term financial stability.
