For millions of Americans, buying a new car is becoming increasingly unaffordable. Now, some lenders are offering auto loans stretching as long as 100 months, which is more than eight years. This is raising concerns that consumers are being trapped in debt long after their vehicles have lost much of their value.
According to automotive research firm Edmunds, the average amount financed for a new vehicle reached a record $44,664 in the third quarter of 2026. The average monthly payment climbed to $787, while 25.5% of financed new-car purchases carried loan terms of 84 months or longer.
Longer loans offer immediate relief by lowering monthly payments. But they also substantially increase the total cost of purchasing a vehicle.
For example, financing $44,664 at 8% interest over 72 months produces a monthly payment of approximately $783. Extending that loan to 100 months lowers the payment to $613 but adds nearly $5,000 in interest.
Another danger is negative equity, when drivers owe more than their vehicles are worth. Because automobiles depreciate, borrowers with extended loans can remain financially underwater for years, making it difficult to sell or trade in their vehicles without carrying debt into another purchase.
The consequences could extend beyond individual households.
The Federal Reserve Bank of New York reported that Americans owed $1.71 trillion in auto loans during the second quarter of 2026, with new delinquencies remaining elevated.
Increasingly burdensome car payments could squeeze household spending, weaken consumer finances and contribute to broader economic instability.
However, longer loans are not inherently harmful. For borrowers with stable incomes and competitive interest rates, they can provide manageable payments and preserve financial flexibility. The challenge is ensuring that a lower monthly payment doesn't conceal a vehicle's true cost.
Guest:
Daniel Roccato is a clinical professor of finance at the University of San Diego.
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