Car payments squeeze Americans as auto debt hits $1.68 trillion: Report
Fuel prices are displayed on a sign as a customer fills up his vehicle at a gas station in Miami, Florida, on April 13, 2026.
Joe Raedle | Getty Images
A new report shows that auto debt is becoming a bigger problem for consumers.
Total auto debt reaches $1.68 trillion by the end of 2025; That’s up 37% since the end of 2018, when the debt was $1.23 trillion, according to a new analysis by The Century Foundation, a left-wing think tank, and Protecting Debtors, a consumer advocacy group, provided exclusively to CNBC. This figure also includes traditional installment loans and leases.
Approximately 86 million Americans (about 1 in 4 people) carry unpaid auto loans or leases, the organizations calculate.
The research shows the average origination balance for an auto loan was $33,519 at the end of 2025, compared to $24,782 in the fourth quarter of 2018. During the same period, the typical monthly auto loan payment rose from $506 to more than $680.
“People are increasingly finding their paychecks being consumed by car payments,” said Angela Hanks, chief of policy programs at The Century Foundation.
The rise in auto debt comes as Americans face more expensive vehicles and higher interest rates; This forces them to choose between higher monthly payments and longer repayment terms.
Ownership costs can present additional affordability challenges. Gasoline prices have increased due to the war with Iran and the average price per gallon across the country is $4.53 As of Wednesday, according to AAA.
‘There are almost no new vehicles for sale under $20,000’
rising Car prices have caused many families to take on more debt to get behind the wheel. Average transaction price for a new vehicle That’s about $49,000, compared to between $35,000 and $37,000 in 2018, according to Edmunds.
“That’s a $12,000 to $14,000 move in less than a decade, and revenues haven’t kept pace,” said Ivan Drury, Edmunds’ director of insights.
At the same time, the supply of affordable cars is largely depleted, Drury said.
“Almost there No new vehicle sales under $20,000“Buyers who used to have options at the lower end of the market no longer have options,” Drury said.
In an uncertain economic environment, automakers are focusing on serving high-income buyers who are immune to shocks like pandemics and war, said Sean Tucker, managing editor of Kelley Blue Book.
“In 2017 [automakers] “Tucker built 36 models priced at or below $25,000,” he said. “Today? Four.”
More than 43 percent of new cars are purchased by households with incomes of $150,000 or more, Tucker said.
“This is a record number,” he said. “Automakers serve this market.”
$1,000 monthly auto loan bill becoming more common
Meanwhile, low- and middle-income families are taking out increasingly larger loans. While the average monthly auto loan payment will reach $680 by 2025, the lowest-income borrowers, or those making less than about $35,000 per year, pay an average of $738 per month, according to The Century Foundation and Protect Borrowers.
The organizations found that low-income borrowers have auto loan debt balances that are about $4,000 higher, on average, than households with earnings above $175,000.
People are increasingly finding their paychecks being consumed by car payments.
Angela Hanks
chief of policy programs at The Century Foundation
Share of buyers accepting monthly car loan payments Edmunds found that purchases of $1,000 or more made up 20% of all new vehicle purchases financed in the first quarter of 2026, an increase from about 17% the previous year.
A larger auto debt puts many households under financial strain, Drury said. “That extra money has to come from somewhere; it could be food, rent, savings, an emergency fund,” he said.
Interest rates are increasing, loan maturities are extending
Many borrowers also face higher interest rates when purchasing a car.
According to Edmunds, the average annual percentage rate for new vehicle purchases was 6.9% in the first quarter of 2026; this rate was higher than 6.7% at the end of 2025.
But The Century Foundation and Protection Borrowers found that some consumers with lower credit scores or scores below 580 were paying interest rates above 18 percent. This could cost a person $14,000 in interest alone on a $30,000 car over the term of a six-year loan.
Extended auto loan terms are also at a record high as consumers struggle with expensive vehicles and high interest rates, Edmunds found.
More than 1 in 5 (or 22.9%) of new car purchases financed at the beginning of 2026 included a loan term of seven years or longer, compared to 20.8% at the end of 2025.
Extending repayment is one way to reduce your monthly car loan payment, but comes with risks. Generally, you’ll pay more interest and spend more time repaying. You may also be “underwater” on your car – meaning you owe more than it’s worth – an issue that can carry over to your next car purchase.
“The longer these loans go on, the harder it becomes to get out from under them,” Drury said.
