Monthly car loan payments in the US top $1,000 as prices and rates climb. Learn the trends, impacts and how buyers are coping. Read more now!
U.S. drivers are feeling the pinch. New data reveal that more than one‑fifth of all new‑car financing deals now require monthly payments of at least $1,000 – the highest share ever recorded.
Why payments are jumping
Two forces are converging: higher vehicle prices and rising interest rates. As manufacturers release larger, more equipped models, the sticker price climbs, while lenders push borrowing costs up to compensate for a tighter credit environment.
Key statistics
- In Q4 2025, 20.3% of new‑car loans required $1,000 or more per month, up from 19.1% in Q3 2025 and 18.9% a year earlier.
- Average monthly payment for new cars hit a record $772.
- Average loan balance rose to $43,759, also a historic high.
- About 6.3% of used‑car loans now exceed $1,000 per month.
Longer loan terms
Borrowers are extending the life of their loans to keep monthly outlays manageable. Over 20.8% of new‑car buyers opted for financing periods of 84 months (seven years) or longer, a noticeable increase from the 17.9% seen in Q4 2024.
Interest rates and incentives
The average rate on new‑car financing sits at roughly 6.7%, a modest dip from the start of the year but still near record levels. Zero‑percent financing remains scarce, accounting for only 3.1% of new‑car loans in the latest quarter – a small rise from 2.4% a year earlier, suggesting that promotional offers are slowly returning.
Who can still afford a new car?
Data from Cox Automotive show a 45% jump in purchases by households earning $150,000 + since 2019. Meanwhile, buyers with incomes under $75,000 are exiting the market in larger numbers.
Manufacturers’ response
Many automakers are targeting higher‑income shoppers with premium models, larger trucks, and feature‑rich SUVs that carry higher profit margins. These vehicles help offset the cost pressure on lower‑priced segments but also reinforce the upward payment trend.
What this means for consumers
For the average American, the takeaway is clear: securing a new vehicle now often means committing to a multi‑year loan with a four‑digit monthly payment. Prospective buyers should compare loan terms, shop for the best interest rates, and consider whether a shorter‑term loan (even with higher payments) could save money on total interest.
Staying informed and flexible can help mitigate the financial impact of today’s high‑cost auto market.