After about seven years, the average new car is worth less than half what it sold for new. As of the third quarter of last year, says the credit reporting apparat Experian, almost 20 percent of all new car loans issued were for seven years – and 11 percent of all used car loans.         

The latter being the more interesting of the two data points since the value of a used car after seven years is probably less than balance still due on the loan by then.

And probably sooner.

Even if it is only two or three years old, it will likely have lost around 20 percent of its original new-car value. Seven years down the road, it doesn't look so good.

This means there are apt to be a lot defaults on used car loans coming since it's not economically rational to continue making payments on something that's not worth making payments on. This factor will likely be magnified by the fact that people who take out seven year loans on used cars are generally not the most affluent demographic to begin with and often have not-so-good credit scores in addition, which means they can't afford to pay much to start with and are probably paying usurious interest on the loan. Many of them will either be unable to continue making payments or simply decide to stop making them.