Buying a car used to mean three, maybe four years of payments. Then you owned it free and clear.
That deal is dead.
The average new-car loan now runs about 69 months — nearly six years — according to recent data from Experian. More than a third of new borrowers are signing terms that stretch even longer.
Dealers will tell you the longer term is a favor. Smaller monthly payment, right? Wrong. It’s one of the most expensive traps in personal finance, and it’s swallowing more drivers every quarter.
I’ve spent 35-plus years watching companies dress up bad deals as good ones. This is a classic. Here’s exactly how the six-year car loan works against you — and how to climb out.
1. You’re underwater before you leave the lot
A new car loses value the second you drive it off. Fast. The average new vehicle sheds about 42% of its value over five years, according to a 2026 iSeeCars analysis.
Now line that up against a six-year loan. Your car’s value drops like a rock while your loan balance barely moves in the early years.
For a long stretch, you owe more than the thing is worth. That’s called being underwater. On a six-year loan, you’re swimming in it.
2. Almost 3 in 10 trade-ins are already upside down
This isn’t a hypothetical. It’s happening right now, at scale.
In the second quarter of 2026, 29.6% of trade-ins toward a new car carried negative equity, according to Edmunds. That’s the highest second-quarter share since 2020.
In plain English: Nearly 1 in 3 people trading in a car still owed more than it was worth. Plenty of them never saw it coming.
3. The debt doesn’t disappear — it follows you
Here’s the part that turns a bad loan into a spiral.
When you’re underwater, and you trade in anyway, that gap doesn’t vanish. The dealer rolls it into your next loan. Now you’re financing your new car plus the leftover debt from your old one.
The average underwater trade-in in the second quarter of 2026 owed $6,884, per Edmunds — a record for that period. Roll it forward and you start the next loan already in the hole. It’s the same finance-office math dealers use to pad your monthly payment.
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4. That ‘low’ monthly payment is a mirage
Stretching a loan to six or seven years shrinks the monthly number. It does not shrink what you pay. It does the opposite.
Edmunds estimates buyers who roll negative equity into a new loan will pay about $16,270 in interest over that loan’s life. The average new-car buyer pays $9,811.
That’s roughly $6,500 in extra interest — for the privilege of a smaller monthly bill. Jessica Caldwell, Edmunds’ director of insights, has described long loan terms as a coping mechanism that only pushes total interest higher. He’s right.
5. Long loans are becoming the norm, not the exception
You might assume six-year loans are for people reaching for more car than they can afford. Increasingly, they’re just standard.
More than a third of new-vehicle loans — 35.55% — now run longer than six years, according to Experian. That’s up from about 31% a year earlier. Loans stretching past 85 months are climbing too.
The whole market is sliding toward longer debt. Don’t let it drag you along with it.
6. Underwater borrowers pay a brutal premium
Want to see where this road ends? Look at what the deepest-underwater buyers are paying.
In the second quarter of 2026, buyers who rolled negative equity into a new loan had an average monthly payment of $944, according to Edmunds — a record. The overall industry average that quarter was $777.
That’s $167 more a month, every month, largely to service debt on a car they’ve already handed over.
How to stay out of the trap
The best move is also the simplest, and you probably knew this was coming: Don’t buy a new car in the first place.
I’m turning 71 soon. I’ve made good money for decades. And somehow, I’ve managed to never buy a new car, at least for myself, in my entire life. Honestly, I don’t know why anyone does.
A new car hands you the steepest years of depreciation. Buy the same model two or three years used and you let the first owner eat that loss. You get the car. They took the hit.
But if you’re set on buying new anyway, control the one thing you can: the loan.
Keep the term short. Aim for 48 months, 60 at the very most. If the only way you can afford a car is by stretching to 72 or 84 months, that’s not a financing problem — it’s a sign you’re reaching for too much car.
Put real money down. The bigger your down payment, the less likely depreciation drags you underwater in the first place.
Shop the loan separately from the car. Credit unions are a great source. Get preapproved before you set foot on the lot so the dealer’s finance office isn’t the only game in town, and know the moves that actually lower a car payment before you negotiate.
Whether you go new or used, a cheaper model helps. Here are the most affordable new cars you can buy right now, plus a rundown of which brands bleed value fastest so depreciation doesn’t do the sinking for you.
The math on a six-year loan doesn’t care how you feel about your shiny new ride. Buy used, borrow short, drive it long — and let time work for you instead of against you.
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