If you’re looking at buying a new, or even a used car, your bank account is likely in for a hit. The average price for a new car keeps climbing, and it’s clear that customers are having a harder and harder time affording them. That evidence comes in the form of loan terms that are getting longer year-by-year. You would think this would mean car dealers are on top of the world, and even though they may be, some are starting to get nervous about the way things are going.
Customers May Not Come Back As Quickly
Automotive News talked to some dealers about their concerns regarding longer terms, and they mainly revolve around the risk of customers not returning as quickly for their next vehicle. They talked about the concern that the long terms would generally keep people away longer as they work on paying off the loan, but also the danger of greater negative equity. Buyers with negative equity typically roll that into their next loan, which can result in an already long or expensive loan getting stretched out further, potentially putting off that buyer.
As long as some loan terms have become, even longer ones may be on the horizon. One dealer told Automotive News that some lenders have offered up to 96-month loans. That dealer decided not to offer it, in part because of these concerns about lengthy loans.
Long Loans And High Prices Are Becoming The Norm
Edmunds published its data for new and used car loans, and the costs and terms keep growing. In the second quarter of the year, more than a third of loans last for more than 72 months, and nearly a quarter of loans are at least 84 months long. Both quarters of this year, the average loan was slightly more than 70 months, with it up to 70.4 for the second quarter. Even used car loans have topped the 70-month mark.
Not only are people extending their loans further, they’re using them to take out more money. Edmunds found that people financed an average of $44,156 in the second quarter, up $1,768 over the same quarter last year. For used cars, the financed amount rose to $30,414, an increase of $1,334 over the second quarter of 2025. Monthly payments are higher than ever, too, at $777 a month for new cars and $576 for used cars. These increases reflect the continuing rise in vehicle prices. The average list price of a new car rose to nearly $52,000 in June, more than $2,000 higher than last year.
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This article originally appeared on CarBuzz and is republished here with permission.
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