Discover why U.S. car buyers are paying over $1,000 each month for new and used vehicles and how rising prices and rates affect you. Learn more now!
U.S. consumers are feeling the pinch of soaring vehicle prices and higher borrowing costs. New data from Edmund & S and Carscoops reveal that a growing share of buyers are now paying at least $1,000 a month on auto loans, whether the car is brand‑new or gently used.
Rising Payments Hit Record Levels
According to Edmund’s analysis, 20.3% of all new‑car financing deals in Q4 2025 involved monthly payments of $1,000 or more. That’s the highest proportion ever recorded, up from 19.1% in the previous quarter and 18.9% a year earlier.
The trend isn’t limited to new vehicles. On the used‑car side, roughly 6.3% of financed purchases now exceed the $1,000‑per‑month threshold.
Longer Loans, Bigger Balances
Average monthly out‑of‑pocket costs have hit a record $772 for new‑car borrowers, while the typical loan balance swelled to $43,759. Even as the federal funds rate eases slightly, American shoppers are borrowing more and stretching repayment terms.
Nearly 20.8% of new‑car loans are set for 84 months (seven years) or longer—a figure that, although down from the previous quarter, remains far above pre‑pandemic levels.
Interest Rates Remain Elevated
The average interest rate on new‑car financing sits at about 6.7%, a slight dip from earlier in the year but still close to historic highs. Zero‑percent promotional rates are rare, appearing in only 3.1% of deals—a modest rise from 2.4% a year ago, suggesting that lenders are cautiously re‑introducing incentives.
Shift Toward Luxury Segments
Data from Cox Automotive shows that households earning $150,000 + have boosted their new‑car purchases by 45% since 2019, while buyers with incomes below $75,000 are exiting the market in larger numbers. Automakers are responding by steering product lines toward high‑margin segments such as full‑size pickups, premium SUVs, and upscale trims.
What This Means for Buyers
For consumers, the landscape translates into larger monthly obligations, longer loan terms, and fewer low‑interest financing offers. Prospective buyers should consider:
- Shopping for the best loan rate, even if it means a slightly higher upfront payment.
- Evaluating total cost of ownership, not just the sticker price.
- Exploring certified‑pre‑owned vehicles that may offer lower payments without sacrificing reliability.
- Negotiating loan terms, especially the repayment period, to avoid excessive interest over time.
Staying informed and planning ahead can help mitigate the impact of today’s challenging auto‑financing environment.