84-Month Loans On New Cars Hit All-Time High In Q1 2025

Trends in automotive lending are moving in two different directions. According to new research from Edmunds, both long 84-month loans and short 48-month loans for new cars are on the rise as the middle slowly erodes. 84-month loans are up so much that they hit an all-time high in Q1 2025.

19.8 percent of new car loans made in Q1 2024 were for an extended term of 84 months. That number was 15.8 percent in Q1 2024 and 13.4 percent in Q1 2019. The 7-year car loan is gaining popularity as new car prices rise and shoppers look at the monthly payment more than the car’s MSRP.

At the same time, short loans with terms of 48 months or fewer made up 10.2 percent of the loans on new cars. That’s down slightly from 11.9 percent of loans in Q1 2024 but still represents an upward trend in recent years since that number was only 7.1 percent in Q1 2019. Well-qualified buyers are taking advantage of shorter loans to maximize automakers’ incentives and pay less interest over the life of the loan.

Meanwhile, loan terms traditionally considered normal for new cars are still the majority, but that majority is shrinking. 67.4 percent of new car loans have terms between 60 and 75 months, down almost 10 percent compared to 2019.

“The auto finance market showed signs of steadiness in Q1, but that stability doesn’t mean affordability has improved,” said Jessica Caldwell, Edmunds head of insights. “When one in five new-car buyers are taking on seven-year loans, it’s clear how many consumers are still financially stretched. Even with rates holding relatively flat, the continued reliance on extended terms and high monthly payments reveals how challenging car buying remains. And now, with auto tariffs officially taking effect [on April 3^rd], there’s a risk that they will add fuel to the fire – triggering a disruption that could push vehicles even further out of reach for many shoppers.”

But what about President Donald Trump’s proposal to make the interest on auto loans for American-made cars tax deductible? Since Edmunds data shows the average interest paid on new cars is $9,231, that could bring some welcome financial relief to new car buyers.

“In theory, a tax break like this could provide real relief to consumers, especially with total interest paid on a new-vehicle loan amounting to what could otherwise be used toward a home renovation project or vacation,” said Caldwell. “But there are still a lot of unanswered questions – from how ‘American-made’ would be defined to how this would be implemented and who would qualify. Until those details are clarified, it’s hard to gauge how much effect a policy like this could have on the market.”