For years, the car market’s affordability problem showed up quietly — slightly longer loan terms here, a slightly higher payment there. And then in 2025, it finally became impossible to ignore.
The average monthly payment on a new car now sits north of an eye-watering $750, and lenders are stretching loan terms to eight, nine, or even 10 years just to make payments feel manageable.
Here’s what to know.
The root cause of the rise in car prices is simple to understand. Since 2020 alone, new vehicle prices have jumped more than 30%, pushing the average sticker above $50,000 for the first time.
And yet, for several years, buyers were able to absorb the shock. Pandemic shortages caused buyers to delay purchases, which allowed them more time to save up. Meanwhile, higher-income households shopped for pricier models. But over time, as inflation kept steadily raising prices and interest rates stayed elevated, the math stopped working.
Now many buyers find themselves forced to stretch the timeline. What used to be a standard five-year car loan has given way to six- and seven-year terms, with a growing numbers of borrowers pushing even further. Loans approaching eight years are no longer rare, and a small but rising number now extend past 100 months, The Wall Street Journal reports.
Because such loans offer lower monthly payments, their appeal is obvious. But the trade-off is just as clear. Loans with longer terms mean paying thousands more dollars in interest over the life of the loan, and they also increase risk for buyers, with many vehicles depreciating long before the loan is finally paid off.
Auto debt now totals about $1.6 trillion, and signs of strain are emerging across the market as some borrowers fall behind. Auto-loan delinquencies sit near 15-year highs, and in November the Federal Reserve released data suggesting that high monthly payments are behind the rise in delinquencies.
At the same time, as The Journal reports, automakers have largely abandoned the sub-$30,000 segment, leaving buyers with few truly affordable new-car options. Even as some brands cut prices, the industry’s pricing structure remains tilted toward higher margins, not lower entry points, with the most expensive models fueling carmakers’ profits.
Tariffs are also adding to price pressures, automakers say.
In its latest data release, the BLS showed that used-car prices have risen some 3.6% since 2024, leaving buyers little room to negotiate, even at year-end, when lots and dealers often look to clear inventory. Trucks and larger SUVs in particular remain stubbornly expensive.
The rise of 100-month car loans is a sign in its own right, too. It suggests a market in which prices have outrun incomes, and Americans are searching for some way — any way — to afford the car they need.
