How do 84-month auto loans affect consumers?

84-month auto loans burden consumers with prolonged debt, making it difficult to trade in vehicles and potentially leading to negative equity situations.

What is the dealer trade-in cycle, and how is it being threatened?

The dealer trade-in cycle is the process of customers trading in old vehicles for new ones. It is being threatened by long loan terms that prevent consumers from purchasing new cars in a timely fashion.

What tools are being used incorrectly by the industry in response to high MSRPs?

The industry is relying on extending loan terms as a tool to make monthly payments more affordable, rather than addressing the root causes of high vehicle prices.

What are high MSRPs, and why are they a problem?

High MSRPs, or Manufacturer's Suggested Retail Prices, make vehicles less affordable for consumers, leading to fewer sales and longer loan terms, which exacerbate debt issues.

Survey Reveals What Won't Fix What's Breaking Car Sales

AutoPayPlus says extra-long auto loans are trapping consumers and threatening the dealer trade-in cycle, and that the industry is leveraging the wrong tools to combat high MSRPs.

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March 31, 2026

AutoPayPlus highlights how longer loan terms and affordability pressures are reshaping vehicle purchasing and financing decisions.

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Auto Dealer Today

2 min to read

Extended 84-month auto loans are causing financial difficulties for consumers and impacting the vehicle trade-in cycle.
High Manufacturer’s Suggested Retail Prices (MSRPs) remain a significant issue, with current industry measures falling short.
Lower interest rates are not a sufficient solution to the challenges currently faced in the car sales market.

*Summarized by AI

AutoPayPlus, an automated financial service provider, released findings of a survey examining the impact of extended auto loan terms on dealership sales and customer purchasing cycles.

The survey, conducted in March with more than 2,000 automotive dealers and finance-and-insurance executives, found 64% of dealers say more than three-quarters of their customers are choosing loan terms 72 months or longer.

Additionally, 76% of respondents said they are “extremely concerned” that extended loan terms are keeping customers out of the market longer, disrupting repeat purchase cycles.

Negative Equity and Affordability Challenges

The survey also found that 90% of dealers frequently encounter negative equity or in nearly every deal, reflecting challenges tied to higher vehicle prices and longer loan terms.

When customers owe more than a vehicle’s value, trade-in activity can slow, affecting showroom traffic, inventory turnover and repeat business.

When asked about the biggest threat to 2026 sales goals, nearly 60% of respondents cited customer cash flow and budgeting challenges. This exceeded concerns about high vehicle prices (26%) and interest rates (14%).

Revenue Opportunities and Industry Response

The survey found that 85% of respondents believe dealerships may need to shift toward recurring, service-based revenue models. However, 75% said they were unaware that biweekly payment servicing could be structured as a reinsurable, tax-deferred product.

“The industry has focused heavily on interest rates, but customer payment capacity remains a key issue,” said AutoPayPlus founder and CEO Robert Steenbergh.

Quick Answers

Lower interest rates cannot sufficiently address the fundamental issues such as long loan terms and high MSRPs that are locking consumers into extended financial commitments.