America’s new-car buyers are digging in for the long haul – literally – as more shoppers opt for 84-month loans to manage monthly payments in an increasingly expensive market. And that began even before the recent Trump Admin. tariffs, which analysts predict could raise car prices by $5,000 to $15,000, depending on model and brand.
Of course, no one knows how the auto finance market will change as the tariffs evolve. But even pre-tariff, Edmunds’ latest auto finance data shows nearly one in five new-vehicle buyers (19.8%) committed to a seven-year loan in the first quarter of 2025 – a record high. And although dealers experienced a pre-tariff surge in sales, higher vehicle prices will likely result in higher loan amounts for consumers who need financing.
“A few things are happening right now that lead you to think that people have to finance more,” Jessica Caldwell, Edmunds’ head of insights, tells WardsAuto. “It’s not only the 84-month loan terms, but it’s also just the sheer amount people are financing … over $1,000 a month for a car payment.”
For dealers, the data points to a buyer pool already under significant affordability pressure, even before tariffs hit. Interest rates may hold relatively steady, but shoppers are still maxing out budgets.
“The auto finance market showed signs of steadiness in Q1, but that stability doesn’t mean affordability has improved,” says Caldwell. “When one in five new-car buyers are taking on seven-year loans, it’s clear how many consumers are still financially stretched.”
Even buyers who qualify for shorter loans are pushing boundaries: the monthly payments of $1,000 or more, which Caldwell mentions, remain historically high.
Edmunds reports 17.7% of new-car buyers had four-figure payments in Q1 2025, a slight dip from Q4 2024’s 18.9% but virtually unchanged from a year ago. Meanwhile, average loan amounts remain above $40,000, and 0% financing offers – once a common incentive – have all but disappeared. In Q1 2025, just 1% of loans offered zero interest, Caldwell says.
There is a potential silver lining for some franchisees as manufacturers step up to ease affordability issues.
“What we’re seeing right now is this offer for employee pricing. Ford and Stellantis have say they are starting to offer employee pricing on their vehicles,” Caldwell says. “While we think their prices are going up, and I think ultimately they will go up, we may see some of these incentive programs in the short term.”
Although ad campaigns, such as Ford’s “From America, For America,” are aimed at showing patriotism, Caldwell says the push may also reflect a move to reduce excess inventory.
“This has a lot of inventory, so I could see the money to clear it out,” she says. “We don’t know how long the tariffs will (last). If they last the rest of the duration of Trump’s presidency, I imagine they don’t have enough inventory for that.”
It’s also a strategic opportunity.
“It’s an interesting move. I mean, they’re definitely getting mileage out of it. It’s a compound effect. Employee pricing is one thing, but then now you’re doing it timed to the tariffs. They’re trying to jump on the goodwill.”
But volatility, such as how tariffs impact various manufacturers and models, could bring logistical headaches for dealers.
Caldwell believes a larger issue will revolve around the acquisition of used vehicles, as well as additional time needed to recondition those vehicles when replacement parts are more expensive and scarcer due to tariffs.
“And if the tariffs are canceled in a month, after a dealer just bought a very expensive trade-in thinking that used values will go up ... that will cost them thousands,” she says.
