With new car prices hovering around $50,000, Americans are taking out longer car loans than ever before — and that’s causing them to pay thousands in interest on top of their already expensive vehicles.
According to Cox Automotive’s Kelley Blue Book, the average price of a new car in March was $49,275, up 3.5% from a year earlier.
Car buyers have responded to rising prices by opting for longer car loans. A new survey from LendingTree found that 34.9% of US borrowers have a car loan of more than 6 years. Car buyers are paying an average of $8,750 more in interest over the life of their loan, the study said.
“Vehicles are becoming increasingly expensive,” Matt Schultz, chief consumer finance analyst at LendingTree, said in a statement.
“Many people need to stretch out the payment term to get a payment low enough to make the monthly payment manageable,” Schultz said, adding that this is troubling “especially since vehicles depreciate so quickly.”
Which states have the most borrowers with long car loans?
According to LendingTree, New Mexico leads all states, with 45.8% of borrowers who have auto loans longer than six years.
Here are the top 5 states with the highest percentage of car loans longer than six years:
1. New Mexico
- Percentage of borrowers with loans longer than six years: 45.8%
- Average estimated interest on loans over six years: $14,811
- Average estimated interest on loans with a term of less than six years: $8,570
- Difference: $6,311
2. Alaska
- Percentage of borrowers with loans longer than six years: 44.9%
- Average estimated interest on a loan over six years: $15,150
- Average estimated interest on loans with a term of less than six years: $6,534
- Difference: $8,625
3. West Virginia
- Percentage of borrowers with loans longer than six years: 43.7%
- Average estimated interest on a loan over six years: $13,158
- Average estimated interest on loans with a term of less than six years: $8,044
- Difference: $5,114
4. Arizona
- Percentage of borrowers with loans longer than six years: 41.4%
- Average estimated interest on loans over six years: $13,492
- Average estimated interest on loans with a term of less than six years: $7,939
- Difference: $5,553
5. Louisiana
- Percentage of borrowers with loans longer than six years: 41%
- Average estimated interest on loans over six years: $14,288
- Average estimated interest on loans with a term of less than six years: $8,946
- Difference: $5,342
Nearly 30% of new car buyers are in the water on their trade-in
According to Edmunds.com, nearly 30% of recent new car buyers were saddled with a loan for their trade-in.
The group said 29.3% of trade-ins used in new car purchases in the fourth quarter of 2025 were underwater, meaning owners owed more on their existing vehicle than they did at the time of the trade-in. Edmunds said the figure represents the highest share of underwater car buyers recorded since the first quarter of 2021, when 31.9% of trade-ins had negative equity.
Edmunds.com said its data “highlights how easily negative equity can become a cycle that is difficult to escape.”
“Moving the loan forward may provide short-term relief, but it often leaves buyers with higher payments and fewer options the next time they hit the market,” the group said.
How to avoid the negative equity trap
Edmonds offered these suggestions for breaking the cycle:
- Understand how much a vehicle is worth relative to what it’s owed before you trade in
- Choose a purchase that holds its value and suits long-term needs
- Recognize that focusing only on monthly payments may obscure the true cost of a purchase.
