Why 84-month auto loans are becoming the new normal

My quick take

• Payment pressure is real. With vehicle prices and insurance premiums rising, I see more buyers stretching to 84‑month loans to make their monthly budget work.
  
• Cars last longer. The average vehicle age is about 12.6 years (up from ~11.8 pre‑pandemic). Modern cars are increasingly software‑supported, which helps them stay reliable longer.
  
• Lenders aren’t being reckless. We look at value‑retention data (from sources like Cox Automotive and others). A flatter depreciation curve means the loan’s amortization can reasonably match the asset’s life.
  
• 84 months is here; 120 may come. At today’s costs, 84 months is the new normal. If rates decline, I expect 120‑month options to become more common.
  
• Know the trade‑off. Longer terms lower the payment but increase total interest and can keep you in negative equity longer if you swap cars early.

If you’ve noticed more people financing their cars for 84 months, you’re not imagining it. At Caribou, we’re seeing this trend across the market. This trend signals a response to how car ownership, affordability, and vehicle reliability have evolved.

The real driver: Affordability

New and used car prices have risen significantly in recent years, far faster than most household incomes. Add rising insurance premiums, and the total monthly cost of car ownership has never felt more burdensome. That’s why many buyers are extending their terms because it’s the easiest way to achieve a manageable monthly payment.

“As cars have gotten more expensive, people are using longer term to get to a payment they can afford. For consumers, the goal is to make modern car ownership sustainable.”

Why lenders are comfortable with longer terms

From a lender’s point of view, offering longer loans is a rational response to the data.

Today’s cars simply last longer. The average vehicle age in the U.S. is now 12.6 years, up from about 11.8 before the pandemic. That’s a meaningful jump, reflecting advances in design, materials, and technology.

Modern cars are increasingly software-driven, meaning updates can often fix problems that once required expensive mechanical repairs. This makes vehicles more durable and keeps their value higher for longer.

Because of that, the depreciation curve has flattened, giving lenders confidence that the loan’s amortization curve can reasonably match the car’s value over time.

At Caribou and across the industry, lenders rely on rich data sources, like Cox Automotive, to model risk and value retention. When the data shows that cars hold value longer, longer terms make sense.

“Lenders aren’t taking bigger risks. They’re adjusting to a market where the asset itself performs better over time.”

The trade-offs: Flexibility vs. total cost

There’s no question that an 84-month loan lowers your monthly payment, often by hundreds of dollars. But it’s also true that it increases your total interest paid over time.

The key is matching the term to your goals:

• If you plan to keep your car for 8–10 years, a longer term can make sense. You’ll have lower payments and enough time to pay off the car before it loses too much value.
  
• If you trade every 3–4 years, a shorter term is safer. Long loans can leave you upside-down, owing more than the car is worth.
  
• And if rates drop, having a no-penalty prepayment option gives you flexibility to refinance or pay off early.

Ultimately, the right term balances cash flow and cost. The goal isn’t about making the smallest payment possible, but a realistic one that doesn’t make you pay more interest than you should.

Why 84 months is here to stay 

Given how vehicles perform today, I believe 84 months is the new normal. The combination of affordability pressures and vehicle reliability supports it from both sides—consumers and lenders.

If interest rates decline, it wouldn’t surprise me to see 120-month (10-year) loans become more common, especially for borrowers with strong credit and vehicles that retain value well.That doesn’t mean everyone should jump into a decade-long loan. It simply means the market is broadening the range of options to meet consumers where they are.

Final thoughts

Cars are lasting longer, and the financial tools around them are adapting. What we’re seeing with 84-month loans is an evolution in the industry.

For consumers, that means more flexibility and options to manage affordability. For lenders, it’s about aligning with a market where the vehicle, as collateral, remains strong for years.

As the industry evolves, so should our expectations of what “normal” looks like. And for now, that new normal is seven years long.