A traditional 60-month loan typically reaches breakeven in about three years, but an 84-month loan can take significantly longer to reach the same point, especially since buyers typically keep their vehicles for only 33-35 months. This mismatch can result in buyers owing more than the vehicle is worth long before the loan is fully paid off, potentially trapping them in long-term debt.

Increasing Insurance Premiums: A Growing Burden for Car Buyers

But it is not just car prices that are creating challenges for buyers – they are also facing a growing burden with higher insurance premiums. According to NPR, as vehicle repair costs continue to rise, insurance premiums will likely follow suit. When insurers pay more for parts and repairs, they inevitably pass those costs on to consumers, resulting in higher premiums. For buyers, this means that their total cost of ownership is significantly increasing, not just for the car, but for maintaining it. Even those with minimal insurance coverage, like liability-only policies, will likely see their premiums rise, as property damage coverage becomes more expensive due to the increased repair costs.

Leasing: The Key to Affordable Car Ownership Amid Higher Prices

Leasing is becoming an increasingly popular option as consumers seek more affordable alternatives in a market marked by rising car prices and insurance. The penetration of new vehicles leased has grown significantly since its post-pandemic low of 18% in 2022, reaching 25% in 2024. While this is still below pre-pandemic levels, the rebound indicates a broader shift toward more cost-effective solutions. According to a May 2025 Credit Union Leasing of America (CULA) survey of consumers who have just leased a vehicle, the affordability of leasing versus a loan was the top consideration for the majority (60%). Meanwhile, 90% of those at the end of their lease said they found leasing a good option versus a loan, with affordability again the reason for the majority. Of those who have made a decision on financing for their next vehicle, 78% say they would choose to lease again, citing lower payments, shorter terms and a desire to stay flexible in uncertain economic conditions.

Instant Insights /

Alleviating the Strain of Rising Car Payments Amid Market Uncertainty

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