Automotive costs aren’t taking place, and neither are rates of interest. To afford a brand new automobile, many consumers are signing up for longer loans to make month-to-month funds really feel extra manageable.
Edmunds’ Q2 2025 report reveals a couple of unsettling new information in auto financing. 22.4% of buyers financing a brand new automobile selected an 84-month or longer mortgage time period, up from 20.4% in Q1 2025 and simply 17.6% a 12 months earlier.
In keeping with Edmonds, the typical quantity financed for brand spanking new autos climbed to $42,388 in Q2 , an all-time excessive, and practically 20% of consumers agreed to month-to-month funds of $1,000 or extra. To decrease upfront prices, consumers are additionally placing much less cash down. The typical down fee was $6,433 in Q2, down from $6,579 on the identical time a 12 months in the past.
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Although taking out a seven-year auto mortgage may make month-to-month funds really feel extra doable, it comes with long-term prices. You may pay extra in curiosity general, the automobile will depreciate and there is a greater danger of owing greater than the automobile is value — particularly when you commerce it in early or the automobile loses worth quicker than anticipated.
When you’re contemplating a long-term mortgage to make funds extra reasonably priced, be certain the full curiosity value is not one thing you remorse later. You may additionally wish to consider automobile maintenance, since longer possession normally means paying extra for repairs. And bear in mind, although longer loans could make automobile possession seem extra reasonably priced within the brief time period, they typically increase your true value of possession general.
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Committing to a seven-year mortgage normally means you will be paying extra curiosity over the lifetime of the mortgage and staying upside-down longer. In order for you a decrease month-to-month invoice with out the lengthy mortgage time period, contemplate these alternate options:
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Purchase evenly used: A automobile that is one to 3 years outdated has already taken the largest hit in worth, so the value — and your fee — will sometimes be decrease.
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Put more cash down: A much bigger down fee reduces the quantity you borrow, which implies smaller month-to-month funds and fewer curiosity paid over the lifetime of the mortgage.
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Store round for higher charges: Get pre-approved at a credit score union or financial institution and evaluate no less than two to 3 presents to get the most effective deal. If in case you have a less-than-ideal credit score rating, repair any credit score report errors or use a co-signer to maximise your probabilities of getting a extra reasonably priced charge.