High Number of Americans Taking Long-Term Auto Loans of 84 Months for Vehicle Purchases

In the automotive market of 2025, a notable trend is the resurgence of eight-year (96-month) loans, albeit with interest rates under 1%. This return, though gradual, is gaining traction.

However, this shift comes with its own set of challenges. In Q2 2025, a staggering 26.6% of new-car trade-ins carried negative equity, indicating that customers were owing more on their vehicles than they were worth. This trend is particularly concerning as loans lasting 84 months (7 years) or longer accounted for 22.4% of new financing in the same quarter.

Dealers often advise against choosing the longest loans due to the potential negative equity issues they present. This is backed by the fact that only 6% of buyers opt for four-year loans, while five-year loans have dropped to about 19%, and just 4% of buyers choose three-year loans. The most common form of new vehicle financing, making up 36.1% of the market, is six-year loans.

The total cost of a vehicle increases with longer loans, such as 84-month loans. For instance, the average interest on an 84-month loan is $15,460, which is about $4,600 more than a five-year loan. This means that customers, on average, are paying thousands of dollars more in interest over the life of the loan.

Moreover, longer loans can make it harder to swap out vehicles without rolling debt, considering vehicle depreciation and out-of-warranty repair bills. Leasing remains a viable alternative but comes with its own restrictions.

Tariffs have not directly driven the Q2 numbers, but they are not expected to make things easier for shoppers moving forward. It's worth noting that leasing is not a common form of new vehicle financing in the provided data.

In the second quarter of 2025, nearly one in five buyers signed up for monthly payments over $1,000, highlighting the increasing financial burden that longer loans can impose. Many buyers are faced with the choice of swallowing higher payments or locking themselves into loans that could outlast the car itself.

Despite the data, specific information about which car dealers in the United States are offering an increasing number of 96-month loan agreements in 2025 and thereby increasing the risk of negative equity upon buyback is not available.

In conclusion, while longer car loans may seem attractive due to lower monthly payments, they come with significant risks, including potential negative equity and a higher total cost of the vehicle. Buyers should carefully consider their financial situation and the long-term implications before opting for longer loan terms.