The 7-year car loan is here. Do you really want to be paying off your car in 2032?

More new-car shoppers are taking connected seven-year loans, a inclination that underscores the rising outgo of financing a vehicle.

Auto loans with presumption of 7 years oregon longer made up 22% of each caller conveyance financing successful the 3rd 4th of 2025, Edmunds reports, adjacent to an all-time high.

The mean new-car lawsuit borrowed $42,647 successful the 3rd quarter, astatine an yearly involvement complaint of 7%, for an mean monthly outgo of $754. Nearly one-fifth of new-car buyers present wage astatine slightest $1,000 a month.

Car loans person grown steadily longer successful caller years, arsenic buyers labour to support gait with rising prices. Nowadays, a car purchaser seems to person arsenic galore financing options arsenic a homebuyer.

The Trump medication floated the thought of 50-year location mortgages connected Nov. 9, touting them arsenic a pathway to little monthly payments.

But cars and homes are precise antithetic assets. Homes thin to appreciate. Cars mostly depreciate.

"It’s not wealth that you get back. It’s not equity that you person successful the car," said Brian Moody, enforcement exertion of Kelley Blue Book and Autotrader, speaking to USA TODAY earlier this year.

Here’s different worrisome trend: Many cars are losing worth astatine a faster gait than the borrower repays the loan. You upwind up owing much than the car is worth, a predicament known arsenic being "underwater" oregon upside-down connected the loan. The longer your loan, the greater the hazard of slipping underwater.

An aged regularisation of thumb successful car-buying, known arsenic 20/4/10, held that you should marque a 20% down payment, headdress your indebtedness astatine 4 years, and walk nary much than 10% of your monthly income connected transportation.

Decades ago, three- and four-year car loans were standard.

In the aboriginal 2000s, a five-year word "was benignant of the saccharine spot" for car loans, said Joseph Yoon, user insights expert astatine Edmunds, speaking to USA TODAY earlier this year. Yoon’s ain household took retired a five-year indebtedness successful 2004.

"Now, 20 years on, it seems that saccharine spot has go six years," Yoon said, "with galore radical opting for 7 years oregon longer."

Today, lone 10% of caller car buyers take loans of 4 years oregon less, Edmunds reports.

The mean caller car outgo $50,080 successful September, a grounds high, according to Kelley Blue Book.

Interest rates person soared successful that span. The mean complaint connected a five-year new-car indebtedness drifted from 5% successful August 2020 to 7.6% successful August 2025, according to Federal Reserve data.

Auto buyers typically take a longer indebtedness word due to the fact that a longer indebtedness word means little monthly payments. Dealer negotiations often pivot connected uncovering the close monthly payment, alternatively than the lowest merchantability terms oregon involvement rate, due to the fact that the monthly sum is easier to digest.

"The lone crushed wherefore you would widen retired a indebtedness word seven, 8 years," Yoon said, "is due to the fact that you went to the dealership with a definite fund successful mind, you picked retired a car, and past the salesperson, the concern person, throws a fig astatine you that you cannot afford."

But the magnitude of the indebtedness profoundly affects the involvement you pay, perchance jacking up the full outgo of the transaction.

Here’s an example, offered by Consumer Reports, for a $40,000 car indebtedness astatine a 7% involvement rate.

With a four-year loan, you look a steep monthly outgo of $958, but you headdress your full involvement astatine $5,977 implicit the beingness of the loan.

Bump the indebtedness up to 5 years, and you trim your monthly outgo to $792. But now, you wage $7,523 successful interest.

With a six-year loan, your monthly outgo falls to $682, but your involvement rises to $9,101.

And with a seven-year loan, your monthly outgo slips to $604. And now, you’re paying $10,711 successful interest.

"Yes, your monthly outgo is important," Yoon said. "But with involvement rates arsenic precocious arsenic they are, with a six-year loan, with a seven-year loan, with an eight-year loan, that’s 5 figures of involvement that you’re going to pay."

Longer loans astatine higher rates are pushing much customers underwater.

One-quarter of customers who traded successful utilized vehicles for caller ones successful the past 3 months of 2024 owed much than the trade-in was worth, according to Edmunds. The trade-in efficaciously raised the terms of the caller car.

"If you’re underwater erstwhile you privation to commercialized it in, that’s going to beryllium a problem," said Chuck Bell, a fiscal argumentation advocator astatine Consumer Reports, speaking to USA TODAY earlier this year.

With a utilized vehicle, the numbers tin look adjacent worse.

The mean utilized car sold successful August 2025 had already been driven 72,557 miles, according to Cox.

A emblematic five- oregon six-year-old car has already mislaid much than fractional of its worth done depreciation. If you concern an aging conveyance for 7 much years, "halfway done the loan, your car’s not going to beryllium worthy anything," Yoon said.

Here, from the experts, are a fewer questions to inquire earlier you instrumentality retired a seven-year car loan:

The much you enactment down connected an car purchase, the little you person to finance. With a larger down payment, a purchaser whitethorn beryllium capable to spend the monthly payments connected a shorter-term loan.

Your down outgo "goes consecutive to the bottommost line," Bell said.

Before you perpetrate to a seven-year car loan, see however the monthly payments volition interaction your fund implicit those years, including lodging payments, different indebtedness and unexpected expenses.

A large risk, with a seven-year car loan, is owing much than the conveyance is worth. But if you program to support the car until the indebtedness is paid off, your antagonistic equity volition yet melt away.

"If you similar to support your cars for a agelong time," Yoon said, "then yet it doesn’t matter."

This nonfiction primitively appeared connected USA TODAY: 7-year car loans are here. What volition your thrust beryllium worthy successful 2032?