More new car buyers resorted to 84-month loan financing terms

More cars buyers used seven -year loans to finance new vehicles in the first quarter while they continued fighting with affordability, according to a Recently published report.

Edmunds said last week that he found that 84 -month -old loans represented 19.8% of new vehicle financing in the first three months of 2025.

According to the report, the proportion of seven -year loans for new vehicles in the first quarter increased four percentage points year after year. Compared to the first three months of 2019, said financing of new vehicles has increased 6.4 percentage points.

Edmunds also noted that the 19.8% figure of Q1 marked a “historical maximum” for loans of 84 months in new vehicles.

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“The automatic finance market showed signs of stability in the first quarter, but that stability does not mean that the affordability has improved,” said Edmunds’s director of Edmunds Jessica Caldwell in a press release. “When one in five new car buyers is assuming seven -year loans, it is clear how many consumers are still financially stretched. Even with rates that remain relatively flat, the continuous dependence of extended terms and high monthly payments reveals how the purchase of challenging cars remains.”

In the first quarter, 10.2% of those who financed new vehicles agreed to loans four years or less, something Edmunds linked to “well -qualified buyers who capitalized incentives linked to shorter terms.”

The report also observed a decrease year after year in the loans of financing of new vehicles with terms of 60 to 75 months in the first quarter that, he said, said a “broader change as consumers stretch more and more the terms of loans to meet their financial objectives.” Its participation went from 69.7% in the first quarter from 2024 to 67.4%.

The average loan term for new vehicles was 69.5 months in the first quarter, with new car buyers generally in the hook for a monthly payment of $ 741, according to Edmunds. He also found that the average annual percentage rate of new vehicles was 7.1%.

For approximately 17.7% of new car buyers in the first quarter, they faced monthly payments of more than $ 1,000, Edmunds reported.

Caldwell said that “there is a risk” that the automotive rates of the Trump administration “will add fire fuel” for affordability problems for car buyers, “triggering an interruption that could push vehicles even more out of the reach of many buyers.”

President Donald Trump announced tariffs on imported passenger vehicles, light trucks and certain key car pieces at the end of last month, ascending to 25%. The tax aimed at vehicles and trucks entered into force on April 3, the same day that Edmunds published his report.

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Some economists and financial analysts have said that Trump’s vehicle and auto parts rates could increase vehicles in thousands of dollars.

While revealed car rates at the end of March, Trump indicated that he wanted to do so that people could deduce interest payments for car loans in vehicles manufactured by Americans of their taxes. He also mentioned such a proposal at the beginning of that month during his joint speech to Congress.

President Donald Trump (Kevin Dietsch/Getty Images)

That, according to Caldwell, could “provide real relief to consumers, especially with the total interest paid in a loan of new vehicles equivalent to what could otherwise be used for a renewal or vacation project at home.”

“But there are still many unanswered questions of how ‘manufactured in the United States’ would be defined’ to how this would be implemented and who would qualify,” he said in the press release. “Until these details are clarified, it is difficult to measure how much effect a policy like it is on the market could have.”

Americans with new funds financed bifurcrated more than $ 9,231 in average interest in the first quarter, according to Edmunds.

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The automobile purchase guide based at the end of March that the United States would see a total of more than 3.8 million sales of new vehicles in the first quarter.

Cox Automotive reported Monday that its initial estimate for the average transaction price of new vehicles was $ 47,448 in March.