:max_bytes(150000):strip_icc()/GettyImages-651424203-a1a386c3510c4442ab9c756abe23689e.jpg "Automobile Patrons Are Stretching Auto Loans Longer—And That Can Value Extra Than It Appears")
Key Takeaways
- Multiple in 5 automotive loans now run seven years or longer.
- Longer mortgage phrases might scale back month-to-month funds, however additionally they enhance the full price and the chance.
- For those who can’t repay your automotive mortgage inside 5 years, you could wish to think about a less expensive mannequin, a used automotive, or a bigger down fee.
Extra Automobile Patrons Are Selecting Longer Auto Loans
Rising automotive costs, rates of interest, and affordability pressures are pushing extra patrons towards longer auto loans. Consultants typically suggest not stretching funds past 5 years, but these days it’s frequent for individuals to nonetheless be paying off their automotive seven years later.
Based on Edmunds, a couple of in 5 automotive loans now stretch to a document seven years or longer. Common mortgage phrases have additionally been creeping up, reaching 69.6 months for brand spanking new vehicles and 70.1 months for used vehicles within the fourth quarter of 2025.
Experian, one other trusted supply of auto-industry information, has made related observations. Within the third quarter of 2025, of the new-vehicle patrons who financed their purchases with a mortgage, almost 70% financed with a mortgage of greater than 5 years. Some even opted for mortgage phrases of as much as seven years or extra.
Auto Mortgage Phrases Maintain Getting Longer.
Ten years in the past, new-car loans averaged 67.8 months and used-car loans averaged 66.5 months. In the present day, each are nearer to 70 months, underscoring a long-running shift towards longer auto loans.
Whereas decrease month-to-month funds could make your dream automotive appear reasonably priced, over the long term, you’ll find yourself paying extra curiosity and exposing your self to larger monetary dangers.
How Stretching an Auto Mortgage Raises the Value of a Automobile
Most individuals depend on financing to purchase a automotive, and dialogue on the dealership sometimes revolves round retaining the month-to-month fee as little as potential. Longer loans are sometimes engaging as a result of they will considerably scale back that month-to-month fee.
However there’s a significant trade-off: The longer you borrow, the extra the automotive in the end prices, since you’ll be paying curiosity for an extended interval.
Think about you wished to purchase a brand new automotive for $50,000, which is roughly the common quantity they price lately. Right here’s how the numbers would look with a five-year versus a seven-year mortgage, assuming a down fee of $5,000 and the rate of interest on the $45,000 borrowed being mounted at 7%.
| 5-12 months vs. 7-12 months Auto Mortgage with a 7% Curiosity Charge | ||
|---|---|---|
| 5-year mortgage | Seven-year mortgage | |
| Month-to-month fee | $891.05 | $679.17 |
| Curiosity paid | $8,463.24 | $12,050.33 |
| Complete price | $58,463.24 | $62,050.33 |
As you possibly can see, choosing the seven-year mortgage saves you roughly $212 per 30 days but in addition will increase the price of the automotive by almost $3,600.
Rates of interest on automotive loans are sometimes partly decided by credit score scores, so debtors with poor or restricted borrowing histories might face even larger prices. Longer auto loans additionally enhance the chance of owing greater than the automotive is price. Being “underwater” can entice patrons in debt, make it tough to promote or commerce in a automobile with out paying out of pocket, and result in losses if the automotive is totaled or stolen.
What Automobile Patrons Ought to Take into account Earlier than Taking a Longer Mortgage
Longer loans enhance the full worth of a automotive and the chance of it sooner or later being price lower than you continue to owe. These conditions can drag down your funds.
Earlier than committing, it’s price calculating how far more the automotive would price total by stretching the mortgage time period, contemplating how lengthy you propose to maintain it, and asking whether or not you might nonetheless deal with the fee in case your monetary scenario modified. With longer loans, the month-to-month invoice is decrease, however the obligation lasts longer.
If the one technique to afford the automotive or to qualify for financing is to stretch the mortgage time period, that could be an indication it’s out of your price range. For those who can’t hold the funds inside 5 years, you could wish to think about shopping for a cheaper mannequin, choosing a used automotive, or saving to make a bigger down fee and scale back the quantity you borrow.
Longer loans could make shopping for a fancier automotive viable and instantly reasonably priced, however they arrive on the expense of upper whole prices and fewer flexibility later. For a lot of patrons, the safer transfer isn’t stretching the mortgage however reducing budgets or footing extra of the associated fee up entrance.
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