As new-vehicle prices continue to soar, more Americans are turning to long-term auto loans, even as personal finance expert Dave Ramsey warns that such financing can prolong debt and hinder wealth-building.
Ramsey, a nationally syndicated radio host, has long cautioned that cars are “the most expensive thing we buy that goes down in value” and advises consumers to avoid auto loans whenever possible. He argues that recurring car payments reduce funds available for savings or investments. “Car payments drain your most powerful wealth-building tool — your income,” Ramsey said.
Despite his warnings, data show that longer loan terms are becoming increasingly common. According to Edmunds, 20.8% of buyers who financed a new vehicle in the fourth quarter of 2025 opted for loans of 84 months or longer, up 2.9% from the same period in 2024. This marks the third consecutive year the share of extended loans has grown.
Rising vehicle prices are driving the trend. Kelley Blue Book reports that the average new-vehicle price reached a record $50,326 in December 2025. The average monthly payment for financed vehicles also hit a record $772 during the fourth quarter, up 2.4% from a year earlier.
Used-vehicle financing is following a similar trajectory. The average loan length for used cars reached 70.1 months in the fourth quarter of 2025, up from 69.5 months a year earlier. Meanwhile, the average monthly payment rose $17 to $570, and the average financed amount increased 4.5% to $29,987 over the same period.
Joseph Yoon, a consumer insights analyst at Edmunds, said the shift toward longer loans has been gradual but significant. “The trend has been flying under the radar for a long time,” Yoon told Automotive News. He noted that average down payments have declined, making it harder for buyers to reduce monthly costs without extending loan terms. In the fourth quarter of 2025, the average new-vehicle down payment was $6,228, down 9.2% from a year earlier.
“These customers aim to reduce their monthly spending without really taking into account that if you take a seven- or eight-year loan, you’re not going to get the prime interest rate,” Yoon added.
Financial experts like Ramsey continue to urge caution, emphasizing that longer loans may make cars appear more affordable in the short term but often lead to prolonged debt and increased overall costs.
