Car buyers are facing an uphill battle as it relates to affordability and are changing their approach when it comes to financing their vehicles, new data shows.
According to Edmunds data, 84-month or longer loans made up 22.9% of financed new-car purchases in the first quarter of 2026 — an all-time high — compared to 20.8% in the fourth quarter of 2025 and 21.2% in the prior year.
The average amount financed for new vehicles climbed to a record high of $43,899 in the first quarter of this year, compared to $43,759 in the fourth quarter of 2025 and $41,473 in the first quarter of 2025.
“Q1 financing data shows that car buyers are getting creative just to keep their purchases within reach,” said Jessica Caldwell, Edmunds’ head of insights. “As loan amounts and monthly payments continue to climb to record levels, consumers are having to work harder to make the numbers fit — a clear sign of how strained affordability has become.”
Read more: Can you use a personal loan to buy a car?
A longer-term car loan can be an attractive financing option for prospective buyers. This is because these loans often require less money up front, and spreading the loan over a longer period can result in a lower monthly payment.
For example, say that you purchase a new vehicle and aim to finance $43,899 at a rate of 6.9% — the current average finance amount and APR in the first quarter of 2026, according to Edmunds. That translates to a monthly payment of $660. Compare that to a loan with a slightly shorter term of six years — or 72 months. That monthly payment would be closer to $746.
For buyers who haven’t managed to save for a larger down payment, this can offer some flexibility and allow them to get a new vehicle without too much lead time.
“Right now, consumers are picking their battles when it comes to affordability,” said Ivan Drury, Edmunds’ director of insights, in the report.
“While a larger down payment is typically the better financial move, many buyers simply don’t have that flexibility in today’s market, especially if it means diverting funds away from more immediate needs,” Drury said. “In those cases, extending the loan term can help achieve a similar monthly payment, but it often comes with higher long-term costs and added financial risk.”
Read more: How to buy a car without a co-signer: A guide for first-time buyers
A longer-term loan may prove to be more convenient at purchase time, but it can have several drawbacks over the life of your loan — particularly with car prices on the rise.
The average amount financed for new cars climbed to a record high of $43,899 in the first quarter of this year. The more money you’re financing, the more you can expect to pay in interest over the course of your loan.
Another factor to consider is that, unlike other assets, vehicles depreciate in value over time. At a certain point in your repayment period, you could end up owing more than your car is worth if you opt for a drawn-out loan term.
A longer loan term also means that a portion of your monthly income will be accounted for for several years, which could limit some of your future financial decisions and get in the way of reaching other financial goals.
Ultimately, you’ll need to choose the loan term that best suits your financial situation. However, there are moves you can make to avoid a longer-term loan and save money over time.
Save up for a larger down payment: In general, it’s typically recommended to save at least 10% of the purchase price as a down payment for used cars and a 20% down payment for new vehicles. That means if you plan to buy a $30,000 used car, you need to save a $3,000 down payment first. However, the exact down payment you need to save for your car loan could differ depending on your credit score, income, existing debts, and other factors.
Strengthen your credit score: A stronger credit score could help you secure more favorable loan terms. When you decide to purchase a vehicle, take some time to dive into your credit profile and see if there are opportunities to pay down some of your debt and improve your credit score before you apply for a car loan.
Compare new and used car options: Opting for a used vehicle over a new vehicle could help you save money on your car loan. The average finance amount for a used car is currently $29,314, while a used vehicle is $43,899. Shopping around for the best deal and keeping your options open can help you save thousands of dollars in the long run.
Read more: How much should you save before you buy a car?
