100-Month Auto Loans Surge as Car Prices Rise, Sparking Financial Risk Concerns

Consumers are extending auto loan terms to unprecedented lengths, with 100-month financing now common as new vehicle prices hit a record high of $54,300. This shift is driven by rising sticker prices across brands including General Motors (GM), Ford (F), Tesla (TSLA), and Honda (HMC), as well as growing demand for electric and high-tech models. To manage monthly outlays, buyers are choosing longer repayment periods, even though this strategy increases total interest paid over time. The extension of loan durations from traditional 60-72 months to 100 months reflects a broader strain on household budgets. While monthly payments may drop to around $500–$600 for a $50,000 vehicle, the total interest cost over a decade can exceed $15,000—up to 30% of the original loan amount. This trend is particularly evident in the used car market, where average prices have risen 12% year-over-year, pushing more buyers toward long-term financing to remain affordable. Financial institutions, including major lenders tied to automakers such as GM Financial and Ford Credit, are seeing a surge in 100-month loan originations. Although these loans boost short-term volume, they increase exposure to credit risk as borrowers face higher chances of delinquency during economic downturns or job disruptions. The long-term nature of the debt also limits consumer spending power in other areas, potentially dampening broader economic growth. The implications extend beyond individual households. With global auto sales influenced by demand in North America and China, companies like BABA—whose automotive technology investments are expanding—may see indirect impacts on consumer liquidity. As credit quality weakens, lenders may tighten underwriting standards, potentially reducing access to credit for lower-income buyers and slowing vehicle turnover.