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.

Meanwhile, an October analysis from Reuters Breakingviews warned that extended repayment periods are leaving some higher-risk borrowers owing money on vehicles that may become unreliable before their loans are paid off.

More than 30% of subprime auto loans originated during the first half of 2026 were scheduled to remain outstanding until the financed vehicles were more than 12 years old, compared with just 7% at the end of 2019, Reuters reported.

The financial pressure is also appearing in delinquency figures. An October report from credit rating agency KBRA found that 6.64% of borrowers in its non-prime auto loan-backed securities index were at least 60 days behind on payments in September, up from 6.39% in August. The comparable rate among prime borrowers stood at just 0.57%.

Americans struggling to afford their existing vehicles may also face difficulty escaping those loans. Nearly 30% of vehicles traded toward new-car purchases during the second quarter carried negative equity, meaning their owners owed more than the vehicles were worth, according to separate Edmunds findings.

Those borrowers owed an average of $6,884 more than their trade-ins were worth, leaving them facing the prospect of rolling thousands of dollars in existing debt into their next vehicle purchase.

The Federal Reserve Bank of New York reported that outstanding auto loan balances reached $1.713 trillion during the second quarter, compared with $1.263 trillion in credit card balances. Although delinquency rates across most household credit products remained relatively stable, the central bank said new auto loan delinquencies continued at elevated levels.

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