New-vehicle affordability remains a critical issue, and shoppers are feeling the pressure as they opt into longer loan terms. A recent report from Edmunds uncovered that nearly 1 in 5 customers, or 20%, committed to an 84-month loan in Q1 2025–a seven-year debt that theoretically would not be repaid until 2032.
The growing shift towards 84-month loans for new-vehicle purchases is up 15.8% from Q1 2024 and 13.4% from Q1 2019. This data reveals that consumers are stretching payment over loaner periods to manage the rising vehicle costs and reduce their monthly bills.
Shorter loan terms, 48 months and under, are also gaining traction, with 10.2% of buyers in Q1 2025 opting for this agreement. While this figure is slightly down year-over-year, it’s up from 7.1% in 2019. Edmunds found that buyers who opted for shorter loan terms were typically well-qualified buyers who leveraged term-specific incentives.
In contrast, middle-range terms between 60 and 75 months declined to 67.4%, down from 69.7% in Q1 2024 to 77.7% in Q1 2019. This data reveals a shift in consumers’ financial capabilities, either opting to stretch their payments or shorten their loan terms to gain incentive perks.
High monthly payments remain common despite more buyers leaning into longer loan terms. $1,000+ monthly payments held steady at 17.7% in Q1 2025. While this is down from 18.9% in Q4 2025, driven by a spike in seasonal luxury buying, it’s nearly unchanged from Q1 2024’s 17.3%, showing consistent affordability strain across the board.
The average amount financed in Q1 2025 was $41,473, a slight drop from Q4 but higher than Q1 2024. The average new-vehicle monthly payment is roughly $741, with an average APR of 7.1%. The average down payment was $6,511, a decline from the previous quarter and year-over-year.
The data reveals that new-vehicle affordability is continuing to shrink across the board. With seven-year loans becoming more common, it’s clear that buyers are still financially stretched and being priced out of the market.
As affordability challenges persist, new policy ideas are entering the conversation. One recent proposal from President Trump would allow consumers to deduct interest paid on loans for American-made vehicles, which, if implemented, could offer relief to many buyers. Edmunds analysts estimate that the average interest paid on a new-vehicle loan in Q1 2025 totaled $9,231. However, experts note that the effectiveness of this policy will depend heavily on how terms like “American-made” are defined and how eligibility is determined.
