Seven -year -old car loans are normally the high prices remain high – Jalopnik

It was once almost unheard of, but now the seven -year -old car loan is almost par for the course for a simple reason: it is the only way that most normal people can afford to possess new cars. The average car prices have risen by around 28% in the last five years and are just below $ 50,000. I don’t know how you are, but I don’t have 50 big ones in my pocket.

That is why people do everything to reduce their monthly costs. In comparison with a five -year loan, a seven -year loan can be the difference between $ 1,000 per month and $ 780 per month, according to Bloomberg. At first glance, that is a powerful seductive proposition, and therefore seven -year loans represented 21.6% of all financing of new vehicles in the second quarter of 2025. Six -year loans, which are now the most common, formed 36.1%. Somewhat worrying, there is a growing trend of buyers who choose eight years Loans, but it is still just a small percentage.

Long financing agreements such as these damage both customers and dealers. For customers it costs them thousands of dollars in the long term. Of course, the monthly payments are cheaper, but they pay more generally. The average interest paid on a loan of 84 months is $ 15,460, according to Bloomberg. That is $ 4,600 more than the average for a five -year loan, which used to be the standard. It now represents around 19% of the financing of new cars. Three and four-year loans are only about 4% and 6% of all car loans, respectively.

It is also not the case that this really comes in favor of the dealer. It means less returning customers because they wait longer and longer between trade -in. Damn, even if they finally exchange their car, it is likely that they are upside down on the loan – which means that they owe more than the car is worth.