Over 1 in 5 New Car Buyers Take Out 84-Month Loans

Rising new car prices and longer loan terms raise concerns about negative equity for consumers.

Published on Mar. 5, 2026

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Data shows that 20.8% of new vehicle purchases in the U.S. in 2025 involved financing with loan terms of 84 months or longer, as the average new car price reached a record high of $50,326. Consumers are taking on longer payment periods and lower down payments due to the increasing total cost of vehicle ownership, which has risen 48% since 2019. Experts warn this trend could lead to more buyers facing negative equity if they sell their cars before the loans are paid off.

Why it matters

The rise in long-term auto loans highlights the financial strain many Americans are facing when buying new vehicles. Longer loan periods and lower down payments increase the risk of negative equity, where a consumer owes more on the car than it is worth. This can create difficulties for buyers who need to sell or trade in their vehicles before the loan is paid off.

The details

According to data from Kelley Blue Book, the average price of a new vehicle reached a record high of $50,326 in December 2025, driven in part by a surge in full-size truck sales, which averaged $66,386. As a result, 20.8% of new vehicles financed in the U.S. had loan terms of 84 months or more. The average down payment also declined 9.2% year-over-year to around $6,228 as consumers had less cash available. Experts warn that long loan terms can lead to negative equity, where the car is worth less than what is owed on the loan, creating difficulties if the owner needs to sell or trade in the vehicle.

  • The average new vehicle price reached a record high of $50,326 in December 2025.
  • 20.8% of new vehicles financed in the U.S. had loan terms of 84 months or more through December 2025.
  • The average down payment declined 9.2% year-over-year to around $6,228 in 2025.

The players

Kelley Blue Book

An automotive research company that provides pricing and other data on new and used vehicles.

Joseph Yoon

A consumer insights analyst at Edmunds who commented on the trend of longer auto loans.

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What they’re saying

“I don't assume cars will be any cheaper five or six years from now.”

— Joseph Yoon, Consumer Insights Analyst, Edmunds (Automotive News)

The takeaway

The rise in long-term auto loans highlights the financial strain many Americans are facing when buying new vehicles. Longer loan periods and lower down payments increase the risk of negative equity, where a consumer owes more on the car than it is worth, creating difficulties if they need to sell or trade in the vehicle before the loan is paid off.