America’s Auto Loan Obsession: A 5+ Year Commitment to a Depreciating Asset

In today’s auto market, one of the most outrageous trends is the sheer length of auto loan terms. Recent data shows that the average car loan in the U.S. now exceeds 67 months—that’s over five and a half years of debt for a vehicle that loses value almost as soon as it leaves the lot. It’s a staggering reality that reflects just how distorted the industry has become.

Cars are not investments. They depreciate rapidly, especially in the first three years. So the idea of financing one over five to seven years—often at high interest rates—borders on financial self-sabotage. This isn’t just about convenience; it's about being trapped in negative equity, where you owe more than the car is worth for it's usable lifetime (on average).

Personally, I can't imagine taking on an auto loan that stretches beyond two to three years. The idea of still paying off a car in year six while it’s breaking down or worth half its original price? No thank you. If I were to finance a vehicle, I'd put down at least 30–40% of the car’s value up front. Why? Because that lowers the principal, reduces interest costs, and shortens the loan term—giving me more control over my finances.

And above all, I would never finance a vehicle that costs more than $20,000. It’s not about what you can afford monthly—it’s about the total cost, and what kind of debt you’re willing to tolerate for something that won’t last forever

Americans need to stop being irresponsible with auto loans.