Nearly 20% of new car buyers now opt for 84-month loans

Buyers are increasingly prioritizing lower monthly payments over long-term financial flexibility. (3 min. read)

Author

Marcus Amick
April 04, 2025

A new report from Edmunds reveals that more new car shoppers committed to longer loans in Q1 2025, a trend which is likely to continue with the enactment of auto tariffs. 

The details: The report indicates that 84-month loan commitments hit an all-time high in the first quarter of 2025.

  • 84-month loans made up 19.8% of new-vehicle financing in Q1 2025—up from 15.8% in Q1 2024 and 13.4% in Q1 2019.

  • 10.2% of new-car buyers in Q1 2025 opted into terms of 48 months or less in Q1 2025—slightly down from 11.9% in Q1 2024 but up from just 7.1% in Q1 2019. 

  • Loans between 60 and 75 months accounted for 67.4% of new-vehicle financing in the first quarter of 2025, down from 69.7% in Q1 2024 and 77.7% in Q1 2019. 

What they’re saying: "The auto finance market showed signs of steadiness in Q1, but that stability doesn’t mean affordability has improved. When one in five new-car buyers are taking on seven-year loans, it’s clear how many consumers are still financially stretched,” stated Jessica Caldwell, Head of Insights at Edmunds.

Why it matters: The rise in 84-month loans signals that buyers are increasingly prioritizing lower monthly payments over long-term financial flexibility. And while interest rates and vehicle prices have remained relatively stable, affordability is still out of reach for many consumers—especially if tariff-related price increases materialize.

Zeroing in: The Edmunds report shows that other key market financing factors, including monthly payments, average financing cost per vehicle, and interest rates remained relatively the same.

  • Commitments to monthly payments of $1,000 or more remained high in Q1 2025 at 17.7% compared to 18.9% in Q4 2024, which aligns with the seasonal easing of luxury vehicle purchases in Q1.

  • The average amount financed for new-vehicle purchases was $41,473 in the first quarter of 2025 compared to $42,113 in Q4 2024 and $40,427 in Q1 2024.

  • As far as interest rates, the average new-vehicle annual percentage rate (APR) in Q1 2025 was 7.1%, up from 6.8% in Q4 2024 and the same as it was in Q1 2024.

Worth noting: 0% finance deals, a once-common incentive to entice buyers, only accounted for 1% of new-vehicle loans in Q1 2025, which is the lowest share Edmunds has on record—down from 1.1% of loans in Q3 2023 and 3% in Q1 2024. 

Between the lines: Amid the pricing anxiety stemming from the tariffs, one of President Trump’s recent proposals could help address a key financing factor for car buyers—interest rates, notes Edmunds. 

  • Trump has suggested allowing car buyers to deduct interest paid on loans for American-made vehicles, an idea that he reiterated during Wednesday’s announcement of reciprocal tariffs.

  • Edmunds data shows that the average interest paid for a financed new vehicle averaged $9,231 in Q1 2025.

Bottom line: Longer loans are masking affordability problems, not solving them.

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