New vehicles now cost significantly more than just a few years ago, leading to higher monthly payments for car buyers. To reduce these payments, some borrowers are extending auto loans to unprecedented lengths, such as 100-month terms, or over eight years. A longer loan can cut hundreds of dollars from a monthly bill, making a $50,000 car seem more manageable compared to traditional five-year loans. For families facing inflation and higher interest rates, this choice often feels necessary.
Both buyers and lenders are pushing loan terms further than ever before. What was once a five-year commitment has stretched to six, seven, and now eight years, raising questions about whether longer loans solve affordability issues or simply spread them out over time.
In the fall of 2025, the average price of a new car exceeded $50,000, according to Kelley Blue Book. This increase translated directly into larger loans, with the average monthly payment reaching a record high of $758 in late 2025, as reported by J.D. Power. For many American households, such payments do not fit into budgets, prompting a shift toward longer terms. Experian data shows about one-third of buyers now take loans lasting at least 72 months, with a growing number opting for 85, 96, or even 100 months.
"We don't have $300 monthly payments any longer in new vehicles," said Pennsylvania dealership operator David Kelleher to The Wall Street Journal. "It's a thing of the past."
Longer loans lower monthly payments but come with serious tradeoffs. For instance, a $50,000 car loan at 5% interest over five years results in a roughly $950 monthly payment and about $6,600 in interest. Extending that loan to 100 months reduces the monthly payment to around $600 but increases total interest to about $10,000. Borrowers save money each month but pay more in interest overall.
There is also a risk of being underwater, where the loan balance exceeds the car's value. Vehicles depreciate most in the first few years, while long loans reduce principal slowly. This combination can trap borrowers in a vehicle they later dislike or that becomes unreliable.
"Consumers tend to shop for vehicles based on monthly payment," said Melinda Zabritski, head of automotive financial insights at Experian. "Although we're beginning to see interest rates slowly decline, affordability remains top of mind for many shoppers. It's not surprising to see some shoppers explore the idea of extending loan terms to secure a lower monthly payment."