"It's the way people in the middle class live their lives," says Julie Midkiff, a production director in Atlanta who three weeks ago bought a Honda CR-V using a five-year loan. "I hate the idea of having a loan for that long, but that's what it took to fit my monthly budget."

As overall vehicle sales have flattened or slumped in recent years, carmakers and dealers have looked for new ways to make their wares attractive to potential buyers. Low monthly payments have been one of the surest ways. But keeping them low has required ever-more-precarious financial terms that in some ways mirror the recent perils of subprime lending in the housing market.

The percentage of consumers with negative equity on their car loans has risen and fallen over time and was as high as 39 percent in 1990. But the amount owed at trade-in has risen steadily in recent years as vehicle prices have increased. Buyers who had negative equity when they traded in their cars last year on average owed $3,062 on their loans, compared with $1,726 in 2000 and $617 in 1990.

Cars, meanwhile, are getting more expensive. The average transaction price keeps climbing at a faster rate than inflation as people covet expensive cars and purchase more extra-cost options. In 2006, the average price paid for a vehicle was $29,316, compared with $28,942 a year earlier and $19,773 in 1996, according to CNW Marketing Research in Bandon, Ore. The researcher says a rising number of people are "buying in the 90th percentile," which means they are purchasing cars with optional equipment that boosts the sticker price close to the vehicle's maximum possible price.

The tendency to buy cars "loaded" with added-cost options is driven in part by the quickening pace of automotive technology. Expensive gear like satellite-navigation and video- entertainment systems once available in only the most luxurious cars are now optional on even entry-level models. Escalating technological advances also mean cars are being redesigned with new, sought-after features at shorter intervals than before, making existing models appear to age faster and enticing consumers to seek the latest models.