Once considered rare, $1,000 car payments are fast becoming the new normal.
Last quarter, nearly one in five new car buyers who financed their purchases took on monthly payments of $1,000 or more — a record share, according to a new report from Edmunds.
Car shoppers also borrowed more overall, financing an average of $42,388 for new vehicles last quarter, another all-time high and about $10,000 more than at the end of 2019.
The record-breaking trends weren’t driven by tariffs or skyrocketing car prices, according to Ivan Drury, Edmunds’ director of insights. Instead, they likely stem from consumers opting for longer loan terms.
Loans lasting 84 months or longer made up a record 22.4 percent of new-vehicle financing, up from 17.6 percent a year ago, Edmunds found. At the same time, the average down payment has actually fallen, shrinking by about $150 compared to a year earlier.
“It’s clear that buyers are pulling the few levers they can control to manage affordability,” Drury said in a statement.
Still, he noted that those efforts to reduce costs in the short term could end up being more expensive in the long run.
That’s because interest rates remain historically high — around 7 percent for the average new-vehicle APR — and 0 percent finance deals have all but disappeared, accounting for just 0.9 percent of new car loans, the lowest share in over two decades.
Automakers have warned that President Trump’s tariffs will make cars even less affordable, and some have already announced job cuts in the U.S.
Tariff fears initially sparked a surge in car demand as Americans rushed to buy before prices rose. While that effect has largely faded, it’s possible those concerns led some buyers to borrow more than they otherwise would have, in order to lock in a vehicle before conditions worsened.
Now, many could be stuck with car payments they can’t afford.
How much car debt is there?
With more than $1.64 trillion outstanding, auto loan debt is the second-largest category of consumer debt, behind only mortgages.
Americans are now borrowing more, for longer and at higher interest rates than they used to, with some fearing that a bubble could be about to burst.
The average monthly payment on a new car loan has risen by roughly a third since the pandemic, from $570 in 2019 to $756 in the latest quarter.
Analysts have also been paying attention to rising delinquencies, which remain elevated from pre-pandemic levels and suggest more people are falling behind on their car payments. Earlier this year, the share of subprime auto borrowers who were at least 60 days past due hit its highest level since 1994, according to Fitch Ratings.
But other data paints a less alarming picture.
Experian’s first quarter report showed the share of auto loans and leases 30 days past due fell from 2.1 percent at the start of 2024 to 1.95 percent in 2025. Meanwhile, the percentage of 60-day delinquencies held steady over the same period.
