Edmunds: 7 year loans make up 20% of new car financing.

[Adam W]

There are some astounding numbers in this new report from Edmunds. Borrowers are adding nearly $10k to their vehicle price by choosing longer loan terms and higher interest rates above 7%.

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"When one in five new-car buyers are taking on seven-year loans, it’s clear how many consumers are still financially stretched. Even with rates holding relatively flat, the continued reliance on extended terms and high monthly payments reveals how challenging car buying remains. And now, with auto tariffs officially taking effect today, there’s a risk that they will add fuel to the fire​

Slate was smart to start their reveal announcement with a discussion about payments and affordability. I bet most consumers just think they're paying off the purchase price over time without really understanding how much additional cost they're adding with these kinds of loans.

USA Today summary
Full Edmunds report

 

[lgerger]

There are some astounding numbers in this new report from Edmunds.

Yup. That tells me people are foolishly overextending themselves and buying things they can't afford. The loan companies/banks are laughing all the way to the...well, bank.

 

[evtruth]

There are some astounding numbers in this new report from Edmunds. Borrowers are adding nearly $10k to their vehicle price by choosing longer loan terms and higher interest rates above 7%.

​

"When one in five new-car buyers are taking on seven-year loans, it’s clear how many consumers are still financially stretched. Even with rates holding relatively flat, the continued reliance on extended terms and high monthly payments reveals how challenging car buying remains. And now, with auto tariffs officially taking effect today, there’s a risk that they will add fuel to the fire​

Slate was smart to start their reveal announcement with a discussion about payments and affordability. I bet most consumers just think they're paying off the purchase price over time without really understanding how much additional cost they're adding with these kinds of loans.

USA Today summary
Full Edmunds report

The fuel savings alone would cover almost half the car payment for many people (average MPG of an auto in the US is 24.4 MPG *).

24.4 MPG @ 13,500 mi/yr @ $3/gal = $138/mo in gas

340 Wh/mi @ 13,500 mi/yr @ $0.11/kWh = $41/mo in electric

$20K @ 72 mo & 6% interest = $331/mo

That makes this truck a $234/mo car payment for many people.

For someone who travels 100 miles a day round trip to/from work (26K miles a year) that's literally a $186/mo difference in fuel - effectively a $145 car payment and a fuel savings of almost $9,000 (yes, NINE THOUSAND DOLLARS) over the 100K mile warranty alone. Drive it for 200K miles and the Slate truck is darn near FREE from fuel savings alone - not to mention engine oil changes, transmission oil changes, etc. A lot of people don't think about the MASSIVE fuel and maintenance savings over the long term, especially when replacing an older vehicle with a Slate truck.

* https://afdc.energy.gov/data/10310