Automotive OEM Intelligence Report
April 2026
- Even as 84-month plus financing reaches 12.8% of all new-vehicle sales in March, JD Power finds customers with longer loans return to market faster than customers with shorter terms
- Average monthly payment on new-vehicle loans now tops $806, up $40 from March 2025
- Nearly one-third (31.2%) of used-vehicle trade-ins now carry negative equity, an increase of 4.8 percentage points from March 2025
Extended loan terms have moved from the margins of auto finance to the center of the affordability conversation, a conversation that is now dominating the industry. As vehicle transaction prices continue to rise, the market has responded in a predictable way — it has stretched time. Once considered excessive, a 72-month loan is now commonplace, and 84-month financing has increasingly moved from the fringes to become a mainstream solution.
How are these longer loan terms affecting monthly payments, average vehicle ownership terms and manufacturer and dealer incentive and sales strategies? This JD Power Automotive OEM Intelligence Report dives into key insights gathered from JD Power proprietary market data, to offer a data-driven perspective on new- and used-vehicle sales trends.
Longer Loan Terms
JD Power data show that loans of 84 months or longer accounted for 12.8% of all sales in March 2026, climbing steadily from 7.3% in March 2019. Similarly, 72-month loans now account for 40.5% of all sales, up 4.1 ppts since March 2019. These longer terms are no longer niche offerings. They are a core affordability tool in a high-price environment.
Monthly Payments Keep Rising
The logic behind longer loan terms is straightforward. In a climate of rising transaction prices, consumers continue to focus primarily on the monthly payment. Extending the loan term reduces the payment to a manageable level without reducing the price of the vehicle. However, new-vehicle prices have risen so dramatically that, even with a large portion of buyers now opting for longer-term loans, the average monthly payment is still climbing. Through March 2026, the average monthly new-vehicle loan payment is $806, up $40 from March 2025. Moreover, in March, 2026 18.4% of all finance customers have a monthly payment over $1000. This segment of the market is dominated by premium and pick-up truck customers. Only 9.3% of mainstream non-pickup truck buyers have finance monthly loans over $1000.
Data updated through March 2026. Charts and graphs extracted from this content for use by the media must be accompanied by a statement identifying JD Power as the publisher and the report from which it originated as the source. No advertising, commercial, or other promotional use can be made of the information in this content or JD Power results without the express prior written consent of JD Power.
Trade-In Equity Deteriorating
While the logic of ever-increasing loan terms is easy to understand, this solution is not without tradeoffs. Though the monthly payment appears manageable in longer-term loans, the total cost of ownership increases. Buyers remain in debt longer, and their financial flexibility narrows.
For example, customers taking 84-month loans currently have an average financing interest rate of 8.53%, which is 132 basis points higher than the average finance rate for customers with 72-month loans (7.21%) and 357 basis points higher than those with 60-month loans (4.96%). Customers taking longer-term loans must balance the higher interest rate with the monthly payment relief provided by the additional 12 to 24 months.
The mismatch between loan length and ownership behavior creates market tension on a few different levels. First, because buyers are getting less-favorable rates, the net value of the vehicle after a few years of payments is significantly less than that of customers financing with shorter terms.
Exacerbating that issue further, consumers who take on these longer-term loans still return to the market in approximately three-and-a-half to four-and-a-half years on average. In fact, as the charts below indicate, 20% of all new-vehicle buyers return to market within 3-4 years of their original purchase. Among those with 84-month loans, however, that percentage jumps up to 44.6%. This suggests clearly that buyers opting for longer loan terms are monthly payment shoppers, seeking a monthly outlay that fits within their budgets. Notably, pick-up truck buyers made up just 18.4% of retail sales in March but represented 34.1% of the 84 mo. loans.
Charts and graphs extracted from this content for use by the media must be accompanied by a statement identifying JD Power as the publisher and the report from which it originated as the source. No advertising, commercial, or other promotional use can be made of the information in this content or JD Power results without the express prior written consent of JD Power.
Charts and graphs extracted from this content for use by the media must be accompanied by a statement identifying JD Power as the publisher and the report from which it originated as the source. No advertising, commercial, or other promotional use can be made of the information in this content or JD Power results without the express prior written consent of JD Power.
Because customers with 84-month and even 72-month loans re-enter the market well before their loans are paid off, they create an ideal recipe for negative equity, where the remaining loan balance exceeds the value of the vehicle at trade-in. In 2025, 26% of used-vehicle trade-ins carried this negative equity, up from 24% in 2024.
Looking at this from another angle, buyers who financed new vehicles in 2022 will owe about $1,400 more after 48 months (potential trade-in time) than buyers in 2021.
So, what happens when the new-car buyer has less equity in their trade-in vehicle than before? The monthly payment on their new purchase goes up. In fact, lower trade equity is the largest factor driving higher monthly payments.
Incentives Keep the Cycle Going
Beyond that, when buyers trade in a vehicle with negative equity, that shortfall is often rolled into the next transaction, also at a cost to affordability. A potential saving grace for these buyers are promotional incentives that may periodically aid their financial position. Cash-back incentive offers are beneficial in relieving the negative equity pressure on customers returning to market. Some customers can perceive the zero-percent offers such as those seen on EVs as a panacea and return early to market. However, these offers do not resolve the negative equity problems, and, depending upon the level of incentive offered on new vehicles, it could become difficult for buyers to secure financing if they have too much negative equity in their trade-in vehicle. Here again, the cash incentive is wildly popular in the pick-up segment, helping to drive those buyers into longer-term financing, but if those cash incentives were to go away, new-vehicle buyers could face serious challenges securing financing.
Through March 2026 the average incentive offered per vehicle was $3,431, which is up $271 from March 2025. As affordability challenges continue to create headwinds for buyers, manufacturers will likely use incentives to help spur new demand.
Data updated through March 2026. Charts and graphs extracted from this content for use by the media must be accompanied by a statement identifying JD Power as the publisher and the report from which it originated as the source. No advertising, commercial, or other promotional use can be made of the information in this content or JD Power results without the express prior written consent of JD Power.
A Delicate Balancing Act
Longer loan terms are both a necessity and a signal. They help sustain sales volumes in the face of high transaction prices. Without them, many consumers would be priced out of the new-vehicle market. At the same time, their continued prevalence signals underlying affordability stress. Extended terms are compensating for higher prices rather than resolving the root cause.
For the better part of the last two decades, extended-term financing and cash incentives have helped the auto industry navigate a tricky balancing act between volatile swings in supply and demand. From the 2008 financial crisis to the COVID-19 pandemic, where aberrant trends in vehicle supply warped traditional patterns of vehicle sales, consumers have become increasingly reliant on these synthetic forms of liquidity to keep buying new cars, trucks and SUVs. While the auto and consumer financing industries still have plenty of tools at their disposal to keep this cycle going for the near-term, the extended buildup of longer-term loans, increased negative equity and liberal use of incentives could eventually create a day of reckoning where it is impossible to keep engineering a soft landing.
Find out More
This Automotive OEM Intelligence Report is based on insights gathered from JD Power intelligence and proprietary market data. It was authored by Tyson Jominy, senior vice president of OEM customer success, and Srini Rajagopalan, vice president, OEM customer success, at JD Power. Please contact us at the numbers below to learn more about the underlying research.
Media Contacts
Zak Minert; Central; 714-270-1675; [email protected]
Joe LaMuraglia, J.D. Power; East Coast; 714-621-6224; [email protected]