As vehicle prices continue to rise, American car buyers are increasingly stretching their financing terms in an effort to keep monthly payments manageable. New data from Experian shows that long-term auto loans have become more common across both the new and used vehicle markets, reflecting the growing affordability challenges facing consumers.
While longer loan terms can help lower monthly payments, they often result in buyers paying more interest over the life of the loan and remaining in debt for significantly longer periods. The trend illustrates the difficult balancing act many shoppers face as vehicle prices and financing costs remain elevated.
According to Experian’s latest State of the Automotive Finance Market Report, more than one-third of new vehicle buyers financed their purchases with loans exceeding six years during the first quarter of 2026. The figure represents a notable increase compared to the same period a year earlier.
The data suggests that affordability concerns continue to shape purchasing decisions throughout the automotive market, even as consumers remain interested in larger vehicles, trucks, and SUVs that typically carry higher price tags.
Long-Term Auto Loans Continue to Rise
Experian found that 35.55 percent of new vehicle loans in the first quarter of 2026 carried terms longer than six years. That marks a significant increase from 30.83 percent recorded during the first quarter of 2025.
Even more striking, a growing number of buyers are taking on financing terms exceeding seven years. Loans longer than 85 months accounted for 3.33 percent of all new vehicle financing during the quarter, up from 2.95 percent a year ago.
The used vehicle market is showing a similar pattern. More than 31 percent of used vehicle buyers financed their purchases with loans exceeding six years, while the percentage of loans extending beyond 85 months also increased slightly year-over-year.
Higher Prices Are Driving Financing Decisions
The transition toward longer loan terms comes as vehicle prices continue climbing. Experian reported that the average amount financed for a new vehicle reached $43,925 during the first quarter, an increase of $2,150 compared to the same period last year.
Average monthly payments also continued to rise. New vehicle buyers paid an average of $770 per month, up from $748 a year earlier.
Used vehicle buyers faced similar pressures. The average amount financed increased to $27,070, while average monthly payments rose to $531. As prices remain elevated across the market, extending loan terms has become one of the most common ways consumers reduce the immediate financial burden of vehicle ownership.
Refinancing Becomes a Popular Cost-Saving Strategy
As interest rates gradually ease, more consumers are turning to refinancing as a way to lower their monthly expenses. Experian’s report found that refinancing reduced average interest rates by 2.2 percentage points during the first quarter.
The average refinanced loan carried an interest rate of 8.05 percent, compared with 10.29 percent before refinancing. That translated into an average monthly savings of $81 for borrowers who refinanced during the quarter.
Credit unions emerged as the dominant force in the refinancing market, accounting for more than 63 percent of all automotive refinancing activity. Borrowers who refinanced through credit unions saved an average of $101 per month, compared with approximately $60 for those who refinanced through banks.
Subprime Lending Continues to Expand
The report also showed increased financing activity among subprime borrowers. Consumers with lower credit scores accounted for 15.75 percent of all vehicle financing during the first quarter, up from 14.40 percent a year earlier.
Growth was visible in both new and used vehicle financing. Subprime borrowers represented 6.88 percent of new vehicle loans and 20.60 percent of used vehicle financing, both higher than the figures recorded in early 2025.
The increase suggests lenders are expanding credit availability to a broader range of consumers despite ongoing affordability concerns throughout the market.
Delinquencies Edge Higher as Buyers Face Pressure
Rising vehicle costs may also be contributing to increased payment difficulties for some consumers. Experian reported that 30-day delinquency rates rose to 2.00 percent during the first quarter, up from 1.95 percent a year earlier.
Sixty-day delinquency rates also increased slightly, climbing from 0.83 percent to 0.86 percent. While the changes are relatively modest, they indicate that some borrowers are beginning to feel the strain of larger loan balances and higher monthly obligations.
The report also revealed changing consumer preferences in vehicle financing. Electric vehicle financing declined from 10.93 percent to 6.23 percent year-over-year, while hybrid vehicle financing increased from 12.08 percent to 14.90 percent. This suggests many buyers continue to seek fuel savings while remaining cautious about fully electric ownership.
As vehicle prices remain high and affordability remains a primary concern, long-term financing appears likely to remain a significant part of the automotive market for the foreseeable future.