More Americans Turning To Skyrocketing Car Loan Payments Just To Afford Vehicle

More than one in five Americans financing new cars are now committing to monthly payments of at least $1,000, a record as buyers take on larger loans to afford increasingly expensive vehicles, according to an October report from automotive research firm Edmunds.

The growing financial burden comes as Americans owe more than $1.7 trillion on their vehicles, exceeding the nation’s outstanding credit card debt. Meanwhile, longer repayment periods and mounting delinquencies among higher-risk borrowers are raising concerns about whether consumers can continue managing their auto debt.

A record 21.2% of financed new-car purchases carried monthly payments of at least $1,000 during the third quarter, up from 19.1% a year earlier, according to data released by Edmunds on Oct. 1.

The average monthly payment climbed to a record $787, while the average amount financed reached $44,664, up from $42,744 during the same period in 2025.

Americans are also stretching their car loans over increasingly lengthy periods. More than one in four financed new-vehicle purchases, or 25.5%, carried repayment terms of at least 84 months during the third quarter, another record.

The longer repayment periods are making vehicles more expensive over time. Edmunds estimated that the average new-car borrower would pay a record $9,938 in interest over the life of the loan, despite the average annual percentage rate remaining unchanged at 7%. 

The burden is particularly steep for Americans purchasing used vehicles through finance companies. The average interest rate on those loans reached 15.92% in June, according to Federal Reserve data published by the Federal Reserve Bank of St. Louis.

Using the Federal Reserve’s average used-car loan amount of approximately $24,958 and a repayment period of roughly 66 months, a hypothetical borrower paying that interest rate would face monthly payments of approximately $570.

Over the life of the loan, that borrower would pay approximately $12,656 in interest alone, meaning roughly one-third of every dollar repaid would go toward interest rather than the original debt. The calculation assumes a fixed-rate loan with equal monthly payments and no additional fees.