With car prices on the rise, an increasing number of buyers are opting for 6½- and 7-year loan terms.

• Over a third of new vehicles purchased in the fourth quarter were financed using loans lasting six years or more, according to Experian.
• One way auto buyers are attempting to mitigate the increase in new and used vehicle prices resulting from the scarcity of new cars and trucks is by opting for longer loan terms.

A report analyzing auto financing trends reveals that the increase in auto prices in the second half of 2021 has led more consumers to take out longer-term auto loans, beyond six years.

In the fourth quarter, over a third of new vehicles purchased were financed with loans that have terms of 6½, 7, or 7½ years, according to Experian, a credit monitoring service that analyzes new and used vehicle loans.

One way auto buyers are attempting to mitigate the increase in new and used vehicle prices resulting from the scarcity of new cars and trucks is by opting for longer loan terms.

According to Melinda Zabritski, senior director of automotive financial solutions for Experian, the increase in loan amounts is not solely due to inventory shortages, but also partly because consumers are purchasing larger vehicles.

In the fourth quarter of 2021, the average amount financed for a new vehicle loan increased by $4,300 compared to the same time in 2020, reaching a new record high of $39,721. Despite consumers' efforts to reduce their payments by taking out longer-term loans, the average monthly payment still rose by $65 to a new record high of $644.

The latest numbers suggest that the combination of high demand and low inventories has caused auto prices to increase significantly.

Used vehicle prices and loans have also increased to a record high, with the average amount borrowed in the fourth quarter reaching $27,291, an increase of 20%, and the average monthly loan payment now at $488, which is also a record high, according to Experian.