Smart Borrower Blog

Average Car Loan Term Tops 69 Months

Oct 24th, 2019 @ 12:49 PM by Amber Nelson

U.S. auto prices are rising, pushing car loan terms to new limits, according to credit reporting bureau Experian.

The average loan for a new car grew to $32,119 in the 2019 second quarter, an increase of about 33% over the past ten years. The average loan for a used car increased to $20,156. Total U.S. auto loan debt now sits at $1.2 billion.

In order to qualify consumers for these pricier vehicles, auto lenders are pushing the length of loans farther and farther. According to the Wall Street Journal, the average loan length for a new car is 69 months and more than a third of borrowers are taking out loans over six years long. Ten years ago, only 10% of consumers had loans with six-plus year terms. Currently, there is even a tiny segment (1.5%) of borrowers who have car loans as long as 85 months or over seven years.

Two major problems are surfacing with higher prices and longer terms. First, the percentage of Americans that can afford to buy a car with cash is shrinking, falling to just 18%. And sticking with a manageable 4-year auto loan makes it virtually impossible for many consumers. According to, to keep a payment under 10% of the median income while contributing a 20% down payment, a borrower can only afford an $18,390 car, excluding taxes. That means most borrowers truly cannot afford a new car.

The second problem is that with such long loan terms, many borrowers get upside-down on their loans – their cars are worth less than the amount left they owe the lender. When these consumers are ready to trade in their existing car for a new one, they still have debt that must get rolled into the new car loan. This can strain borrowers’ financial situation and put them at greater risk of default.

Roughly 7 million Americans are behind on their car payments by 90 days or more, still a relatively low level by historical standards, but that number could grow if prices continue to rise, interest rates increase, or consumers don’t change their auto tastes and buying habits.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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