New data shows a growing number of drivers now paying $1,000 or more each month on auto loans, adding financial strain in an already tight economy.
Car website Edmunds recently unveiled new analysis that shows a
record 20.3% of new-car buyers paid $1,000 or more per month on auto loans in the fourth quarter of 2025, up from 19.1% the prior quarter and 18.9% a year earlier. Among used-car buyers, 6.3% now face $1,000-plus monthly payments, also up from previous quarters.Edmunds found that auto loan costs have risen across the board, even for buyers avoiding four-figure payments. The average monthly payment for a new vehicle hit a record $772 in the fourth quarter of 2025, up from $754 the previous quarter.
The data reflects a K-shaped economy, according to Edmunds Insights Director Ivan Drury, with wealthy consumers spending more, while lower-income households face mounting pressure from higher living costs.
“For the haves, things are perfectly fine; for the have-nots, it’s a struggle from one payment to the next,” Drury said.
Melissa Dickerson of Orting, Washington, was shocked when her used-car loan for a replacement SUV jumped to $1,100 after her son totaled her Acura. The $400 monthly payment she had previously enjoyed was no longer an option.
“It was quite a shock,” Dickerson said. “When I heard my interest rate was going to be 15%, I almost crapped my pants.”
She had to extend the loan to 72 months, or six years. The steep car payments, along with rising household costs like rent, pushed Dickerson deep into credit card debt.
“Now I’m relying on the credit cards to live, to pay for things that I can’t pay for now,” she said. “Food and stuff you need — the electric bill, phone bill. You think you’ll be able to pay them off next month, and then you can’t.”
As car prices rise, buyers are financing larger amounts, with the average new-vehicle loan reaching $43,759 in Q4 2025, up from $42,647 the prior quarter. To manage costs, more consumers are choosing longer loans—84 months or more accounted for 20.8% of new-car purchases, up from 17.9% a year earlier.
Experts advise keeping monthly car payments within a manageable range before committing to four-figure loans.
“If your goal is to not have a $1,000 monthly payment on a car, then you’ve got to either buy a less expensive car, or save and have a nice down payment toward a vehicle,” said Crystal Cox, a certified financial planner and senior vice president at Wealthspire Advisors in Madison, Wisconsin.
Data shows people are keeping cars longer before upgrading, with the average trade-in age rising to 7.6 years in Q1 2025—the oldest since
2019. Holding onto vehicles longer allows buyers to save for a down payment or pay in full, reducing interest on big-ticket purchases. Financial advisor Jake Martin suggests keeping total debt, including a car loan, below 36% of gross income to maintain affordability after accounting for other obligations, such as mortgages and credit cards.RELATED CONTENT: End Of The Swipe: Unserious NYC Commuters Bid Farewell To the Iconic MetroCard