Harford County's Jeff Judge in CNBC: Why a lower car payment can cost more over time

By Jeff Judge, CFP®, AEP®, ChFC®, CLU®, Managing Partner, Chesapeake Financial Planners, Forest Hill, MD.

The monthly payment looks manageable, so you sign. Then you realize the loan runs seven years. That moment is the subject of a recent CNBC story by Mike Winters, where I was asked about the rise of the "permanent" car loan.

Edmunds data cited in the article shows roughly one in four new-vehicle financers now take a loan of 84 months or longer. The article's example is a $50,000 loan at 7%. Stretching it from 60 to 84 months can cut the payment by more than $200 a month, but it can also add about $4,000 in interest. Add a trade-in that still has a balance owed, and that debt can roll into the next loan.

My point to Mike was that a longer loan is not automatically wrong. It is a trade-off, and you should weigh it with your eyes open. I tend to drive my cars until the wheels fall off. Once the loan is paid off, you can keep driving the car and point that old payment toward retirement savings or a family vacation.

This matters here in Harford County and across the Baltimore metro. Think of a commuter in Perry Hall racking up miles, a family in Aberdeen stretching the budget for a second vehicle, or a couple in Cockeysville a few years from retirement. For each of them the question is the same: how long do you plan to keep this car, and does the loan term match? A seven-year payment on a car you expect to replace in four can leave you owing more than the car is worth.

The takeaway: before you sign, compare the monthly payment, the total interest, and how long you expect to keep the car. If retirement is within a few years, ask how that payment competes with what you could be saving. Every situation is different, so talk with your own advisor about what fits.

This piece builds on "The growing problem of 'permanent car loans': Why the math of car buying is breaking down," in CNBC (September 2026).

Jeff Judge, CFP®, AEP®, ChFC®, CLU®, is Managing Partner at Chesapeake Financial Planners in Forest Hill, MD. Book an intro call.