Why Are So Many Americans Choosing 84-Month Car Loans?
If you’ve shopped for a new car lately, you’ve probably noticed something a little unsettling: the sticker shock is real. The average new car price in the US is hovering around $50,000, and that’s left a lot of buyers facing a tough choice. Do you accept a sky-high monthly payment, or do you stretch your loan out over seven years—or even longer? According to recent data from Edmunds, a jaw-dropping 22.4% of new car buyers are now signing up for 84-month loans or more. That’s nearly one in four people committing to a car payment that could outlast their next job, apartment, or even relationship.
What’s Driving the Shift to Longer Loan Terms?
Let’s be honest: it’s not that people love the idea of paying off a car for seven or eight years. It’s about survival. With prices climbing and wages struggling to keep up, buyers are pulling every lever they can to keep monthly payments manageable. Six-year loans have become the new normal, making up 36.1% of new vehicle financing. Five-year loans, which used to be the standard, have dropped to just 19%. Even eight-year loans—once almost unheard of—are starting to creep up, though they’re still less than 1% of the market.
The numbers tell a clear story. In the second quarter of 2025, nearly 19.3% of buyers agreed to monthly payments over $1,000. That’s the highest share ever recorded. And it’s not just about the payment amount—buyers are also putting less money down and financing more of the purchase price, which only adds to the long-term cost.
How Do Longer Loans Impact Your Wallet Over Time?
Here’s where things get dicey. Stretching your loan out to 84 months might make your payment look friendlier, but it comes with a hidden price tag. Edmunds’ director of insights, Ivan Drury, points out that the average interest paid on an 84-month loan is $15,460—about $4,600 more than you’d pay on a five-year loan. That’s money you could be using for anything else: savings, investments, or even just a vacation.
And then there’s depreciation. Cars lose value fastest in the first few years, but if you’re locked into a long loan, you’re likely to owe more than your car is worth for a big chunk of that time. In fact, 26.6% of new-car trade-ins in Q2 2025 had negative equity, with the average customer owing $6,754 more than their car’s value. That’s a tough pill to swallow if you need to trade in early or if life throws you a curveball.
Are Dealers Pushing Buyers Into Longer Loans?
Surprisingly, many dealers aren’t thrilled about these ultra-long loans either. Mike Schwartz, vice president of dealer operations at Galpin Motors in Los Angeles, says they actually try to steer customers away from the longest terms. Why? Because when customers come back to trade in, they’re often “heavily upside-down”—owing way more than the car is worth. That’s bad for the customer and, frankly, a headache for the dealer.
What Alternatives Do Buyers Have?
Leasing is still an option, but it comes with its own set of restrictions—mileage limits, wear-and-tear charges, and the fact that you don’t actually own the car at the end. For many, leasing just isn’t flexible enough. That leaves buyers with a tough choice: accept higher payments, buy a cheaper car (if you can find one), or lock into a long loan and hope nothing goes wrong.
Some experts recommend considering certified pre-owned vehicles, which can offer significant savings and still come with a warranty. Others suggest saving up for a larger down payment to reduce the amount you need to finance. And if you’re set on a new car, it’s worth shopping around for the best interest rates—sometimes a credit union or local bank can beat the rates offered at the dealership.
How Do Loan Terms Break Down in 2025?
Here’s a quick snapshot of how new vehicle financing shakes out right now:
3 years: 4%
4 years: 6%
5 years: 19%
6 years: 36.1%
7 years: 21.6%
8 years: Less than 1% (but rising)
The trend is clear: shorter loans are becoming rare, while longer commitments are taking over. It’s a sign of the times, but it’s also a warning flag for anyone thinking about their long-term financial health.
What’s the Real Risk of Negative Equity?
Negative equity—owing more than your car is worth—isn’t just a theoretical problem. It’s a reality for more than one in four buyers trading in their cars. And the average amount of negative equity is climbing. If you need to get out of your loan early, you might have to roll that debt into your next car loan, creating a cycle that’s hard to break.
This isn’t just a personal finance issue; it’s a broader economic concern. According to the Federal Reserve, auto loan delinquencies have been ticking up, with about 5.1% of Americans behind on their car payments as of mid-2025. That’s the highest rate in over a decade. When borrowers are stretched too thin, it can ripple through the economy in unexpected ways.
What Can You Do to Protect Yourself?
If you’re in the market for a car, it pays to be strategic. Consider these tips:
– Set a firm budget before you shop, and stick to it—even if the dealer tries to upsell you.
– Aim for the shortest loan term you can comfortably afford. The sweet spot for most buyers is still five years or less.
– Put down as much as you can upfront to reduce the amount you need to finance.
– Shop around for the best interest rate, and don’t be afraid to negotiate.
– Think twice before rolling negative equity from your old car into a new loan.
The big takeaway? Car financing isn’t about perfection—it’s about smarter adjustments. Start with one change this week, and you’ll likely spot the difference by month’s end.