Rising car prices and higher interest rates push US auto loans over $1,000 per month. Discover how financing terms and buyer trends are shifting. Read more now.
U.S. consumers are feeling the pinch as rising vehicle prices and higher borrowing costs push monthly auto loan payments past the $1,000 mark.
Record‑High Payments on New‑Car Loans
According to data compiled by Edmund of1, 20.3% of new‑car purchases financed in Q4 2025 required a monthly payment of $1,000 or more. That’s the highest share ever recorded, up from 19.1% in Q3 2025 and 18.9% a year earlier.
Used‑Car Financing Isn’t Much Cheaper
The same trend appears in the used‑car market. About 6.3% of financed used‑vehicle purchases now exceed $1,000 per month, indicating that higher costs are spreading across both new and pre‑owned segments.
Loan Amounts and Terms Reach New Peaks
Carscoops reports that the average monthly outlay for a new‑car loan topped a record $772 in the same quarter. The typical loan balance rose to $43,759 – also a historic high.
Borrowers are extending the length of their loans to keep monthly payments manageable. Roughly 20.8% of new‑car buyers opted for terms of 84 months (seven years) or longer, compared with just 17.9% in Q4 2024. While the share slipped slightly from Q3 2025, it remains well above pre‑pandemic levels.
Interest Rates and the Scarcity of 0% Deals
The average interest rate on new‑car financing sits at 6.7%, a modest decline from earlier in the year but still near record highs. Zero‑percent financing is rare – only 3.1% of new‑car loans carried a 0% rate in Q4 2025, up marginally from 2.4% a year earlier, suggesting that promotional offers are beginning to re‑appear but remain limited.
Shifting Buyer Demographics
Cox Automotive data shows a 45% increase in purchasing power among households earning $150,000 or more since 2019. At the same time, many buyers with annual incomes below $75,000 have exited the market, narrowing the pool of consumers who can comfortably afford higher‑priced vehicles.
Manufacturers are responding by focusing on premium segments – larger trucks, SUVs, and high‑end trims that offer bigger profit margins.
What This Means for Consumers
- Expect higher monthly payments unless you can secure a larger down payment.
- Longer loan terms will keep payments lower, but increase total interest paid.
- Shop around for the best financing rate; 0% deals are still limited.
- Consider certified‑pre‑owned or slightly older models to avoid the steepest price jumps.
As the U.S. auto market continues to grapple with price inflation and tightening credit, staying informed about financing options is more important than ever.
Sources: Carscoops, Edmunds, Cox Automotive, industry reports Q4 2025.