WASHINGTON — The average monthly payment on a new-vehicle loan has reached a record $787, while a growing share of consumers are stretching their loans to seven years or longer in an effort to afford vehicles that now cost more than $50,000 on average, according to a new report.
Citing data from Edmunds, Fortune reported the average monthly payment on a financed new vehicle increased to $787 during the third quarter, up from $777 in the second quarter and $756 a year earlier.
At the same time, the average amount financed climbed to a record $44,664, while the average new-vehicle transaction price reached $50,562 in September, according to Kelley Blue Book. That was just $52 below the all-time high.
The average annual percentage rate on new-vehicle loans remained at 7%, unchanged from both the previous quarter and a year earlier.
“Mix those things together and then you get record-high monthly payments,” Joseph Yoon, consumer insights analyst at Edmunds, told Fortune. “Just how the math works out.”
Nationwide, outstanding auto loan balances reached $1.71 trillion in the second quarter, according to the Federal Reserve Bank of New York, an increase of approximately 56% over the past decade.
More Buyers Stretching Loans to Seven Years
According to Fortune, consumers are increasingly turning to longer loan terms to make monthly payments more manageable, although doing so significantly increases their total borrowing costs.
Edmunds reported several records during the third quarter:
- 25.5% of financed new-vehicle purchases carried loan terms of 84 months or longer, up from 23.9% in the second quarter and 21.8% a year earlier.
- 21.2% of new-vehicle buyers committed to monthly payments of $1,000 or more, a record high.
- $9,938 was the average amount of interest paid over the life of a new-vehicle loan, up from $9,442 a year earlier.
- $44,664 was the average amount financed, also a record.
Yoon told Fortune the increasing use of longer terms means borrowers are paying interest over extended periods, particularly as loan balances rise.
Helen Colby, an assistant teaching professor at Carnegie Mellon University’s Tepper School of Business, warned that longer loans also create financial pressures beyond interest expenses.
“For borrowers who already have tight budgets, getting such a long loan means committing themselves to five, six, or even seven years of increased spending that will reduce their budget for other things like vacations, savings, or even necessities like food and clothing,” Colby told Fortune.
How the Market Reached This Point
Fortune reported that the roots of today’s affordability challenges extend to the COVID-19 pandemic, when manufacturing shutdowns and parts shortages led automakers to prioritize production of higher-margin vehicles.
Yoon said manufacturers discovered they could maintain strong profits by selling fewer vehicles at higher prices.
New vehicles now cost approximately 30% more than they did six years ago, according to Fortune.
Despite those increases, vehicle sales have remained relatively resilient.
“We keep thinking that there might be some type of tipping point. Are sales going to crater? And we haven’t seen anything like that. Sales are fine,” Yoon told the publication.
Jessica Caldwell, Edmunds’ head of insights, described the latest financing figures as a “remarkable display of consumer resilience.”
Higher-Income Households Driving Sales
Fortune reported that continued demand for expensive vehicles reflects a broader economic divide in which higher-income households remain capable of making large purchases while lower-income consumers face increasing financial constraints.
Yoon said new-vehicle buyers increasingly come from households earning six-figure incomes.
According to Cox Automotive data cited by Fortune, the share of new-vehicle buyers earning less than $100,000 annually declined from 50% in 2020 to 37% in 2025.
The trend is also affecting younger consumers, who are increasingly unable to afford new vehicles.
Fortune interviewed Abbey Burbach, 35, who said she works three jobs totaling 50 to 60 hours a week but still cannot afford a new car.
“You’re lucky to find a new car for under $400 a month anymore,” Burbach said.
Yoon said the average age of new-vehicle buyers has been increasing in recent years as younger consumers find themselves priced out of the market.
Used-Vehicle Market Offers Limited Relief
Consumers seeking less expensive alternatives are encountering similar affordability problems in the used-vehicle market, Fortune reported. According to Edmunds, buyers financing used vehicles are borrowing an average of $30,703 at an average APR of 10.6%.
Used-vehicle prices increased sharply during the pandemic as shortages of new vehicles redirected buyers into the preowned market.
Edmunds’ data show the average used-vehicle transaction price increased from $20,942 in the second quarter of 2020 to $27,306 by the third quarter of 2021.
Prices have remained elevated partly because fewer leased vehicles have been returning to dealerships.
Before the pandemic, leases accounted for approximately 30% of new-vehicle transactions, according to J.D. Power. That share fell to 17% during the vehicle shortage and had recovered to only about 23% during the first half of 2026.
Because leased vehicles typically return to dealerships after two to four years, the decline has reduced the supply of relatively recent used vehicles.
“Literally millions of used cars that are supposed to come back to dealer lots every year aren’t coming back anymore,” Yoon told Fortune.
More Used Inventory Expected
Some relief could emerge as additional leased vehicles return to the market.
According to Experian estimates cited by JPMorgan, the number of vehicles coming off lease is projected to increase from approximately 2.15 million in 2025 to 2.66 million this year and 3.29 million in 2027. That additional inventory could help improve used-vehicle availability, although Fortune reported that consumers currently face affordability pressures in both the new- and used-vehicle markets.
Yoon said he does not expect significant changes in vehicle financing conditions before the end of the year. “We have this huge revolving circle of negative effects on the market for the consumer,” Yoon told Fortune. “There’s nowhere you can catch a break.”
