Seven-year Car Loans Are Becoming Normal As Car Prices Stay High

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It was erstwhile astir unheard of, but now, nan seven-year car loan is beautiful overmuch par for nan people for 1 elemental reason: it's nan only measurement astir normal folks tin spend to ain caller cars. Average car prices person risen astir 28% complete nan past 5 years and are sitting correct beneath $50,000. I don't cognize astir you, but I don't person 50 ample conscionable sitting successful my pocket.

Because of that, group are doing everything they tin to bring their monthly costs down. Compared pinch a five-year loan, a seven-year loan tin beryllium nan quality betwixt $1,000 per period and $780 per month, according to Bloomberg. On nan surface, that's a mighty tempting proposition, and it's why seven-year loans represented 21.6% of each new-vehicle financing successful nan 2nd 4th of 2025. Six-year loans, which are now nan astir common, made up 36.1%. Somewhat worryingly, there's a increasing inclination of buyers opting for eight-year loans, but it's still conscionable a mini percentage.

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Long financing agreements for illustration these wounded some customers and dealers. For customers, it costs them thousands of dollars successful nan agelong run. Sure, nan monthly payments are cheaper, but they're paying much overall. The mean liking paid connected an 84-month loan is $15,460, according to Bloomberg. That's $4,600 much than nan mean for a five-year loan, which utilized to beryllium nan standard. It now represents astir 19% of new-car financing. Three- and four-year loans only dress up astir 4% and 6% of each car loans, respectively.

It's not for illustration this really useful retired successful nan dealer's favor, either. It intends less repetition customers arsenic they're waiting longer and longer betwixt trade-ins. Hell, moreover erstwhile they do yet waste and acquisition successful their car, it's apt that they're upside down connected nan indebtedness — meaning they beryllium much than nan car is worth.

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