Data shows that a growing number of Americans are financing new vehicles over extended periods as car prices continue to climb. In 2025, 20.8% of new vehicle purchases in the U.S. involved loans of 84 months or longer, while the average new car price reached a record $50,326.
According to Kelley Blue Book, the spike in prices was driven in part by strong sales of full-size trucks, which averaged $66,386. At the same time, the average down payment on a new car declined 9.2% year-over-year to around $6,228, signaling tighter cash availability among car buyers.
Financial analysts warn that long-term loans increase the risk of negative equity, a situation where a vehicle’s resale value falls below the remaining balance on the loan. This can create challenges for buyers who need to sell or trade in their cars before completing their payments.
“While stretching out loan terms can make vehicles more affordable in the short term, it comes with hidden risks,” said industry specialists. “Consumers must be aware that longer loans can leave them owing more than the car is worth, complicating future sales or trades.”
The trend underscores the financial pressures many Americans face when purchasing new vehicles. As auto prices rise, experts advise buyers to plan carefully, budget realistically, and consider the long-term implications of extended loan terms to avoid getting trapped in high-risk auto loans.
