High Prices Force Buyers to Stretch Out Car Loans
June 16, 2026
In the fourth quarter of 2025, the average monthly payment was $767 for new cars and $537 for used cars. A growing percentage of car buyers are taking out loans with longer repayment periods of six or seven years, which might help someone qualify to buy a more expensive car, but it also pushes up the cost of ownership over time. For example, a borrower with a five-year, $40,000 car loan with a 6.5% APR would have monthly payments of $783 and would pay $6,959 in total interest. A seven-year loan at the same rate would have more affordable monthly payments of $594, but interest payments would total $9,894, an additional $2,935 over the life of the loan.
The typical American wage earner would have to work 36 weeks to pay for the average new car, so it’s no wonder that drivers are hanging on to their old cars as long as possible. The average age of passenger cars on U.S. roads rose to 14.5 years in 2025.
Share of new auto loans by term, Q4 2025
1 to 48 months: 10.7%
49 to 60 months: 20.2%
61 to 72 months: 37.3%
73 to 84 months: 29.6%
85+ months: 2.2%
Sources: Experian, State of the Auto Finance Market Q4 2025; S&P Global, 2025
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Prepared by Broadridge Advisor Solutions. © 2025 Broadridge Financial Services, Inc
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