Car prices aren’t going down, and neither are interest rates. To afford a new car, many buyers are signing up for longer loans to make monthly payments feel more manageable.
Edmunds’ Q2 2025 report shows a few unsettling new records in auto financing. 22.4% of shoppers financing a new vehicle chose an 84-month or longer loan term, up from 20.4% in Q1 2025 and just 17.6% a year earlier. 
According to Edmonds, the average amount financed for new vehicles climbed to $42,388 in Q2 , an all-time high, and nearly 20% of buyers agreed to monthly payments of $1,000 or more. To lower upfront costs, buyers are also putting less money down. The average down payment was $6,433 in Q2, down from $6,579 at the same time a year ago. 
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Though taking out a seven-year auto loan might make monthly payments feel more doable, it comes with long-term costs. You’ll pay more in interest overall, the car will depreciate and there’s a bigger risk of owing more than the car is worth — especially if you trade it in early or the vehicle loses value faster than expected. 
If you’re considering a long-term loan to make payments more affordable, make sure the total interest cost isn’t something you regret later. You’ll also want to factor in car upkeep, since longer ownership usually means paying more for repairs. And remember, though longer loans can make car ownership appear more affordable in the short term, they often raise your true cost of ownership overall. 
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Committing to a seven-year loan usually means you’ll be paying more interest over the life of the loan and staying upside-down longer. If you want a lower monthly bill without the long loan term, consider these alternatives:
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