topic Re: Why are buyers opting for longer car loans despite rising prices and interest costs? in Credit in the News

Why are buyers opting for longer car loans despite rising prices and interest costs?

Gollum — Sat, 25 Oct 2025 18:16:58 GMT

From the article:

"More than one in five new-car loans taken out during the last four years were for 84 months (seven years) or longer, according to an analysis by Edmunds. Eight-year (96-month) loans are available now."

and

"More than one in four new vehicle trade-ins (28 percent) were underwater in Q3 2025, according to Edmunds, a four-year high. The average amount owed on upside-down loans hit a record $6,905."

https://komonews.com/news/local/new-car-shopping-debt-lengthy-car-loans-can-cost-buyers-thousands-used-car-kelley-blue-book October 25, 2025 (cookies required)

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

JoeRockhead — Sat, 25 Oct 2025 19:11:54 GMT

Why are buyers opting for longer car loans despite rising prices and interest costs? Because they convince themselves, or get sold on the notion that they can afford a certain payment amount every month and either don't realize (not unheard of but highly unlikely), or worse yet, ignore the grand total they end up paying out (much more likely). Plus it's the only way they can get that brand new $100k+ pickup truck they just have to have.

We live in a society of over consumption. For those that can't rein in their spending, it all catches up with them sooner or later.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

Patient957 — Sat, 25 Oct 2025 20:59:36 GMT

Many car buyers gauge what they "can afford" based on monthly payment alone, and this suits dealerships and salespeople just fine. Car buyers in general just aren't very financially savvy and they get eaten alive by the sharks at the dealership.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

GZG — Sat, 25 Oct 2025 22:37:42 GMT

@Gollum wrote:
From the article:
"More than one in five new-car loans taken out during the last four years were for 84 months (seven years) or longer, according to an analysis by Edmunds. Eight-year (96-month) loans are available now."
and
"More than one in four new vehicle trade-ins (28 percent) were underwater in Q3 2025, according to Edmunds, a four-year high. The average amount owed on upside-down loans hit a record $6,905."
https://komonews.com/news/local/new-car-shopping-debt-lengthy-car-loans-can-cost-buyers-thousands-used-car-kelley-blue-book October 25, 2025 (cookies required)

because they couldn't afford the car otherwise

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

crystal626 — Sun, 26 Oct 2025 06:29:23 GMT

@GZG wrote:
@Gollum wrote:
From the article:
"More than one in five new-car loans taken out during the last four years were for 84 months (seven years) or longer, according to an analysis by Edmunds. Eight-year (96-month) loans are available now."
and
"More than one in four new vehicle trade-ins (28 percent) were underwater in Q3 2025, according to Edmunds, a four-year high. The average amount owed on upside-down loans hit a record $6,905."
https://komonews.com/news/local/new-car-shopping-debt-lengthy-car-loans-can-cost-buyers-thousands-used-car-kelley-blue-book October 25, 2025 (cookies required)
because they couldn't afford the car otherwise

It's this.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

Kforce — Sun, 26 Oct 2025 17:31:50 GMT

All of the above are true.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

Zoostation1 — Sun, 26 Oct 2025 18:48:24 GMT

100% agree with the all of the above takes. With the average price of a new vehicle hitting the $50k mark, we're at a point where a large percentage of people should not even be considering buying new and probably should scale back what they're looking for (to what they need rather they want in the used market).

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

Thomas_Thumb — Sun, 26 Oct 2025 22:48:13 GMT

Anyone offering a reverse mortgage loan on a car?

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

Realist — Sat, 01 Nov 2025 03:52:13 GMT

It goes hand in hand with the increase in debt within the economy. There's always a bigger fool around until the house of cards come crashing down, and just because you can, doesn't mean you should.

The day that unions within the Big 3, and unions across the country signed record wage increases and bonuses, I said mark my words, this is the turning point. The same exact thing happened in 2008, only this time the entire game is significantly larger.

When the reset occurs, when the deflationary pressures take hold, the ones that will be hurt the most, are those that took out an extended loan on an over priced vehicle. No different than those that bought housing, likely at a top. When the turn comes, deflation doesn't reduce interest rates - at all. It's the housing prices that will be reduced to match the appropriate rate. Much like the valuation of a vehicle will be reduced or cut in half. This means, many will be underwater. Their only solution will be to print more - and pray that interest rates continue to decrease. Decrease in interest rates, are not the pattern moving forward longer term.

Finance and monetary history, is a course and lesson of study everyone should take up on life. The more we get away from sound money, the more perverse the moves both up, and down. You like all the inflation today? Wait until the pendulum swings and you see deflation/disinflation - temporary or otherwise.

Hello 2008, may I have a job? Sure, try again in two-four years.

I remember a few years ago, I told everyone in my circle, enjoy the jobs and the teeth kicking you can - now. When that pendulum swings, you're going to be lucky if you can keep a job, let alone find one if you need one. That comment mentioned back then reflects - today. The collapse is starting. Enjoy the ride.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

cashorcharge — Mon, 03 Nov 2025 18:51:57 GMT

Most people are payment focused when they shop for a car and fail to ask pertinent questions about the price of items, the interest rate or on leases...the residual or money factor. If you just focus on payment, I guarantee you are overpaying in the process. Edmunds forum is a great place to find invoice costs, finance and lease rates.

The challenge in the used market now that people may not notice, those same people signing up for longer loans may not realize if they intend on trading in their car before it's paid off.....happens A LOT, that they will have a lot of negative equity to contend with during their next transaction...they will either need to write a check to get out of...or burry into the new loan. Gone are the days of equity in cars because their values have gone up or stayed high. Yes, tariffs are high, inventory is light at many dealers so deals are not as prevelant....just make sure you pay attention when buying.

Signing up for longer terms are fine...as long as you intend to keep the car at least 5 of the 6 or 7 years you've financed it and aren't surprised when you find you still owe a sizeable amount at trade in time.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

TrapLine — Mon, 03 Nov 2025 19:38:41 GMT

@JoeRockhead wrote:
Why are buyers opting for longer car loans despite rising prices and interest costs? Because they convince themselves, or get sold on the notion that they can afford a certain payment amount every month and either don't realize (not unheard of but highly unlikely), or worse yet, ignore the grand total they end up paying out (much more likely). Plus it's the only way they can get that brand new $100k+ pickup truck they just have to have.

We live in a society of over consumption. For those that can't rein in their spending, it all catches up with them sooner or later.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

USMCOne — Wed, 05 Nov 2025 05:50:27 GMT

Pretty simple question to answer. Over consumption, the price of any vechile is now outrageous in cost, and the williness of the consumer to do this. I bought a new Ram 2500 tail end of covid because the outrageous price they gave me for my prior truck. It was something I could not pass up but I never would of bought what I drive now without that happening. They gave me close to 40k for a 2016 trucks was nuts. The new one was about 80k. Still alot to finance but was affordable in regards to my life. Now 2 years later similar model truck is pushing over 90k. Its stupid.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

JamesS84 — Sat, 15 Nov 2025 00:09:04 GMT

I think rising prices are precisely why buyers are opting for longer car loans. Longer loan terms mean lower monthly payments. They cost you more overall, though.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

Realist — Sat, 15 Nov 2025 17:25:42 GMT

People have acces to online calculators and financial resources today, more than ever before. You can plan everything down to the dollar these days - knowing exactly everything that will happen across the term of a loan. What they don't have access to, is immediate financial guidance or a mentor, unless it runs from a close friend or relative, or unless they discovered it on their own.

People willfully, choose to bury themselves in a sea of financial burden and without a plan, usually due to ignorance or mismanagement. Ultimately, many people don't know any better, and only want what they want. This invites problems if you borrow this way. Longer term loans are not the solution. It's actually the worst situation, even with lower payment amounts.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

AndrewF — Sun, 04 Jan 2026 04:12:46 GMT

@JoeRockhead wrote:
Why are buyers opting for longer car loans despite rising prices and interest costs? Because they convince themselves, or get sold on the notion that they can afford a certain payment amount every month and either don't realize (not unheard of but highly unlikely), or worse yet, ignore the grand total they end up paying out (much more likely). Plus it's the only way they can get that brand new $100k+ pickup truck they just have to have.

We live in a society of over consumption. For those that can't rein in their spending, it all catches up with them sooner or later.

They should be getting the cheapest thing with four wheels and a motor that can reliably get them around.

I remember my mom and dad buying a new car in 1992 and complaining that four years of payments "would go on forever", and that was back when the car would probably be usable for 20 or 25 years with basic upkeep.

Now you have all this plastic junk in the engine and people are financing them for twice as long as the engine lasts. Which is only about 4-5 years. But the payments are for nearly 8 years.

Plastic in the engine was tolerable when you were talking about intake manifolds or valve covers, but I saw someone taking apart a Chevy engine that still used a timing chain (good) but the guide that it was running on was plastic (uh oh).

And then they cram everything that used to be outside the engine and easy to get at, into the middle of the engine, like ignition coils (which break down faster when they're in an engine subject to heat and vibration), and even the starter motor.

My father ridicules me for living in Chicago and says "How do you afford that?" I said "With the pile of cash I don't spend on 8 years of car payments like you guys in Indiana have to do."

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

AndrewF — Tue, 03 Feb 2026 02:28:17 GMT

@crystal626 wrote:
@GZG wrote:
@Gollum wrote:
From the article:
"More than one in five new-car loans taken out during the last four years were for 84 months (seven years) or longer, according to an analysis by Edmunds. Eight-year (96-month) loans are available now."
and
"More than one in four new vehicle trade-ins (28 percent) were underwater in Q3 2025, according to Edmunds, a four-year high. The average amount owed on upside-down loans hit a record $6,905."
https://komonews.com/news/local/new-car-shopping-debt-lengthy-car-loans-can-cost-buyers-thousands-used-car-kelley-blue-book October 25, 2025 (cookies required)
because they couldn't afford the car otherwise
It's this.

I was driving around with my partner in my 2008 Buick that's still going, that I wash and wax every week.

We got behind a newish BMW SUV the other day, and I pointed and laughed. "$1400 car payment. Skips the car wash because there's no money."

The dirt and road salt on that thing was well past "It's Illinois winter but we do what we can." There were layers. It was an eighth of an inch thick for crying out loud.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

Ushio — Tue, 03 Feb 2026 12:59:03 GMT

People refuse to be rational about what they need and this is the inevitable result of it.

There simply are no new utilitarian, economy cars anymore. Cars get more complicated and more expensive, the prices go up, and to keep buying people need to stretch their loans, but keep buying they do.

I've been car shopping with multiple people I know who are on a budget. I point them to a reasonable car for their income, but they immediately get that look on their face. "But the feeeaattureeess." And they go buy some overpriced garbage they can't afford so they can get some fancy looking stuff they don't need and will not ever use.

A lot of people do this, which kills the economy car. Honda Fit? Gone. Kia Rio? Bye. Nissan Versa? Outta here. Cars get bigger, more fancy, and more expensive. Too many people pretend its simply a feature of inflation or CAFE or corporate greed or whatever, and completely ignore the ridiculously awful consumer choices.

Re: Why are buyers opting for longer car loans despite rising prices and interest costs?

AndrewF — Tue, 03 Feb 2026 17:30:07 GMT

@Ushio wrote:
People refuse to be rational about what they need and this is the inevitable result of it.

There simply are no new utilitarian, economy cars anymore. Cars get more complicated and more expensive, the prices go up, and to keep buying people need to stretch their loans, but keep buying they do.

I've been car shopping with multiple people I know who are on a budget. I point them to a reasonable car for their income, but they immediately get that look on their face. "But the feeeaattureeess." And they go buy some overpriced garbage they can't afford so they can get some fancy looking stuff they don't need and will not ever use.

A lot of people do this, which kills the economy car. Honda Fit? Gone. Kia Rio? Bye. Nissan Versa? Outta here. Cars get bigger, more fancy, and more expensive. Too many people pretend its simply a feature of inflation or CAFE or corporate greed or whatever, and completely ignore the ridiculously awful consumer choices.

Every car they sell today has more features than they had twenty or thirty years ago and that's mostly what I've driven.

People should stop being so spoiled and understand even the base model cars are pretty decent these days.

I believe I might be in the market for a Buick Envista in the next few years but I'll keep driving what I have for now since it's just insurance, gas, and oil changes usually.

I'll take the cheapest model, cheapest paint job. Yes, even just the paint color can affect the car price to the tune of $200-300. Ridiculous.

In the 90s, I had a neighbor who was 19. His name was Lynn, and he worked odd jobs along with going to college. He had to get financing for a Geo Metro. They wouldn't finance him for the model that came with hubcaps that was a few hundred dollars more, so he got the one without hubcaps.

That seemed pretty practical to me. One way you get the loan, the other way you don't. One way is more affordable, one way costs a broke college student a lot ($200-300 was a lot more) for little gain.

The car companies make what people will buy. There was never a lot of profit in compliance cars, but when everyone wants champagne on a beer budget, they just stop making them. You're right. Then reasonable people suffer.