If you financed a car in the last few years, there is a strong chance you are paying significantly more each month than you expected when you first signed the paperwork at the dealership.
Average monthly payments on new vehicles reached an all-time high of $773 in the first quarter of 2026, and one in five buyers now commits to a payment of $1,000 or more each month, Edmunds data show. Those figures are not isolated data points from a single quarterly snapshot that will soon reverse and settle back to normal levels for American consumers.
They are the latest markers in a yearslong escalation that has pushed total outstanding auto loan debt to $1.68 trillion, a record sum that touches roughly 28% of all consumers with credit accounts, according to a new analysis from The Century Foundation and Protect Borrowers.
Auto loan balances hit record highs as car prices outpace income growth
Total auto debt climbed 37% from early 2018 to the end of 2025, jumping from $1.23 trillion to $1.68 trillion, the Century Foundation and Protect Borrowers said in their joint report titled “When The Wheels Come Off.”
The average origination balance on a new auto loan reached $33,519 at the end of 2025, a figure roughly $10,000 higher than the average balance recorded in the fourth quarter of 2018, the Century Foundation report noted.
Average transaction prices for new vehicles have climbed to nearly $49,000, compared with a range of $35,000 to $37,000 in 2018, Ivan Drury, director of insights at Edmunds, told CNBC.
That represents a $12,000 to $14,000 increase in less than a decade, and household incomes have not risen at the same pace to offset those higher vehicle costs, Drury explained in the same report.
Borrowers with low credit scores face APRs as high as 18.7%, compared with 6.3% for high-credit-score borrowers, the Century Foundation analysis found. On a $30,000 loan over six years, a deep-subprime borrower pays more than $20,000 in interest, roughly $14,000 more than a super-prime borrower, whose total interest would be about $6,000.
Vanishing affordable models and longer loan terms squeeze buyers further
The supply of entry-level vehicles has collapsed over the past decade, removing a critical safety valve for budget-conscious buyers who once relied on sub-$25,000 options from major automakers.
Sean Tucker, a managing editor at Kelley Blue Book, told CNBC that automakers built 36 models priced at $25,000 or less back in 2017, and that number has since dropped to just four vehicles currently available at that price point.
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Tucker also noted that a record share of new cars, more than 43%, are now purchased by households with annual incomes of at least $150,000, a statistic that underscores how the new-car market has shifted decisively toward wealthier buyers.
To cope with higher sticker prices, buyers are stretching their repayment timelines to lengths that would have been unusual just a few years ago in the broader auto lending market.
Loans of 84 months or longer accounted for 22.9% of all financed new-car purchases in the first quarter of 2026, an all-time high, up from 20.8% in the fourth quarter of 2025, Edmunds reported.
A decade ago, seven-year auto loans represented roughly 10% of the market, meaning the share of buyers committing to those extended terms has more than doubled since then.
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LendingTree analyst warns that stretched loan terms carry hidden long-term costs
Extending a loan from five years to seven years lowers the monthly payment a borrower writes, but the total interest paid over the life of the loan rises substantially with each additional year of financing.
Matt Schulz, chief consumer finance analyst at LendingTree, said the extra cost of financing a car for a full seven years is considerable, and that buyers often overlook total interest in favor of a manageable monthly number, CNBC reported.
“For a lot of people, it’s all about the monthly payment, but the extra cost for financing that car for seven full years is really high,” said Schulz.
New cars typically lose about 20% of their value in the first year after purchase and approximately 55% over five years, according to Kelley Blue Book estimates. That rapid depreciation creates a significant risk of negative equity, a situation in which the borrower owes more on the vehicle than it is currently worth on the open resale market.
In the first quarter of 2026, roughly 30.9% of trade-ins toward new-vehicle purchases carried negative equity, the highest share for any quarter on record since early 2021, Edmunds reported.
The average amount owed on those underwater trade-ins reached $7,183, and that outstanding debt is often rolled into the financing for the buyer’s next vehicle purchase, compounding the problem.
Subprime auto loan delinquencies remain near record levels in early 2026
The affordability crisis is showing up in delinquency data as well, with borrowers who have lower credit scores bearing the heaviest burden of missed and late payments on their outstanding auto loans.
The 60-day delinquency rate on subprime auto loans hovered around 6% from mid-2024 through late 2025, the highest level recorded in more than three decades of tracking, according to a Philadelphia Federal Reserve report published in April 2026.
Subprime borrowers hold only about 17% of all active auto loan accounts nationwide, but they account for nearly two-thirds of all delinquent loans in the auto lending market, the same analysis showed.
Falling behind on a secured auto loan carries the direct consequence of vehicle repossession, and in January 2026, the 60-day subprime delinquency rate reached a record 6.9%, according to Fitch Ratings.
What the road ahead looks like for auto buyers navigating elevated costs
The combination of rising gas prices, which averaged $4.53 per gallon nationally as of early May 2026, and persistent vehicle price inflation is creating a difficult environment for anyone entering the market, according to AAA data.
The Century Foundation report described America’s auto debt surge as a broader affordability problem that extends far beyond the car market itself, with co-author Tara Mikkilineni warning that working families are facing a “financial trap” as transportation costs consume a larger share of household budgets.
Higher vehicle prices, elevated borrowing costs, longer repayment terms, and shrinking access to affordable models are reshaping how millions of households manage transportation expenses, according to a Century Foundation analysis.
The report noted that the growing share of borrowers carrying negative equity and falling behind on payments illustrates how quickly rising costs compound over time.
While demand for vehicles remains strong, Edmunds data suggest that vehicle ownership is becoming increasingly difficult to sustain for many consumers, particularly those with lower incomes or weaker credit profiles.
Related: Car insurance rose faster than groceries, gas, and rent combined
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