With new car prices hovering around $50,000, Americans are taking out longer than ever car loans — and they’re paying thousands more in interest on top of their already pricey vehicles because of it.
The average price of a new car in March was $49,275, which was up 3.5% from one year earlier, according to Cox Automotive’s Kelley Blue Book.
Car buyers have responded to the rising sticker prices by opting for longer car loans. A new poll from LendingTree found 34.9% of U.S. borrowers have car loans that are longer than 6 years. Those car buyers are paying an average of $8,750 more in interest over the life of their loans, the study said.
“Vehicles continue to get more and more expensive,” Matt Schulz, LendingTree chief consumer finance analyst, said in a statement.
Schulz added “many people need to drag out the payoff period to get the monthly payments low enough to be manageable,” which he said is troubling “especially since vehicles tend to depreciate so rapidly.”
Which States Have the Most Borrowers With Long Car Loans?
New Mexico leads all states with 45.8% of its borrowers having auto loans longer than six years, according to LendingTree.
Here are the top 5 states with the highest percentage of longer-than-six-year car loans:
1. New Mexico
- Percentage of borrowers with longer-than-six-year loans: 45.8%
- Average estimated interest on longer-than-six-year loans: $14,811
- Average estimated interest on shorter-than-six-year loans: $8,570
- Difference: $6,311
2. Alaska
- Percentage of borrowers with longer-than-six-year loans: 44.9%
- Average estimated interest on longer-than-six-year loans: $15,150
- Average estimated interest on shorter-than-six-year loans: $6,534
- Difference: $8,625
3. West Virginia
- Percentage of borrowers with longer-than-six-year loans: 43.7%
- Average estimated interest on longer-than-six-year loans: $13,158
- Average estimated interest on shorter-than-six-year loans: $8,044
- Difference: $5,114
4. Arizona
- Percentage of borrowers with longer-than-six-year loans: 41.4%
- Average estimated interest on longer-than-six-year loans: $13,492
- Average estimated interest on shorter-than-six-year loans: $7,939
- Difference: $5,553
5. Louisiana
- Percentage of borrowers with longer-than-six-year loans: 41%
- Average estimated interest on longer-than-six-year loans: $14,288
- Average estimated interest on shorter-than-six-year loans: $8,946
- Difference: $5,342
Nearly 30% of New Car Buyers Are Underwater on Their Trade-Ins
Almost 30% of recent new car buyers were underwater on loans for their trade-ins, according to Edmunds.com.
The group said 29.3% of trade-ins used in new car purchases were underwater in the fourth quarter of 2025, meaning the owners owed more on their existing vehicle than it was worth at the time of trade-in. Edmunds said that figure represented 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’s difficult to escape.”
“Rolling debt forward may offer short-term relief, but it often leaves buyers with higher payments and fewer options the next time they’re in the market,” the group said.
How to Avoid the Negative Equity Trap
Edmunds offered these tips for breaking the cycle:
- Understand how much a vehicle is worth relative to what’s owed before trading in
- Choose purchases that hold their value and align with long-term needs
- Recognize that focusing only on monthly payments can obscure the true cost of a purchase
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