US Car Loans Hit 84+ Months
Over one in five new car buyers in America are now taking out loans of 84 months or longer. This trend reflects the pressure of rising car prices and signals a cautionary note for shoppers — longer loans mean higher total interest paid over time, even if monthly payments seem manageable.
The prevalence of 84-month car loans is highest among Millennial and Gen X borrowers. A 2026 analysis found that 8% of millennials have auto loan terms exceeding seven years. While younger generations like Gen Z have smaller average loan balances, they often face higher interest rates. A primary risk of long-term auto loans is negative equity, where the amount owed on the car is more than the vehicle's actual worth. New cars can lose a significant portion of their value as soon as they are driven off the lot. This immediate depreciation can quickly leave a borrower "upside-down" on their loan, a position that can take years to recover from with a long-term loan. The average interest paid on an 84-month loan can be thousands of dollars more than a shorter-term loan. For example, the average interest on a seven-year loan was recently calculated to be around $15,460, approximately $4,600 more than a typical five-year loan. Lenders often charge higher interest rates for longer loans due to the increased risk of default over a more extended period. The rise in these lengthy loans corresponds with a steep increase in vehicle prices. The average price for a new car has climbed, with one report in late 2025 showing the average transaction price surpassing $50,000. This has pushed the average amount financed for new vehicles to over $40,000. This trend has also been accompanied by a rise in auto loan delinquencies. In the third quarter of 2025, 5% of outstanding auto debt was at least 90 days late. While delinquency rates are rising across most borrower groups, they have been particularly pronounced among younger generations.
