SANTA MONICA, Calif.—More U.S. car buyers are committing to monthly payments of $1,000 or more than ever before, according to new data from Edmunds, underscoring the financial strain facing consumers after another year of high vehicle prices and borrowing costs.
In the fourth quarter, 20.3% of financed new-vehicle purchases carried monthly payments of at least $1,000, a record high and up from 18.9% a year earlier, Edmunds said. In the used-car market, 6.3% of financed purchases reached the same threshold, also a record and up from 5.4% in the fourth quarter of 2024.
The trend has been building throughout 2025. Edmunds data cited earlier this year by the Detroit Free Press showed that 19.3% of new-vehicle buyers had already crossed the $1,000-a-month mark in the second quarter, then an all-time high.
Despite affordability pressures, Edmunds forecasts 16.3 million new-vehicle sales in the United States in 2025 and 16 million in 2026, supported by easing interest rates and stabilizing transaction prices after several years of rapid increases.
A ‘Challenging’ 2025
“Auto financing trends in the fourth quarter underscored just how challenging 2025 was for car shoppers,” said Ivan Drury in a statement. “Faced with persistently high vehicle prices and borrowing costs, many consumers were forced to adapt by financing larger amounts, stretching loan terms and, increasingly, taking on four-figure monthly payments.”
Price data from other industry trackers point to continued pressure. Kelley Blue Book said the average transaction price for a new vehicle in November was $49,814, up 1.3% from a year earlier. J.D. Power estimated the average new-vehicle retail transaction price in December at $47,104, up $715 from December 2024.
“In total, retail consumers will have spent $620 billion on new vehicles in 2025, up 5.8% from last year,” said Thomas King in a media release.
Tariffs Play Role
Drury said some record-setting figures reflect higher costs tied to tariffs and fees, including 25% tariffs on imported autos and parts imposed under President Donald Trump that have been folded into destination charges by many automakers. Destination fees for several pickup brands have risen to about $2,595 for 2026 models, up from roughly $1,995 a year earlier.
Still, Drury said other factors carry more weight, including a seasonal uptick in luxury purchases and a shift away from leasing toward dealer or outside financing, which increases the share of high-dollar loans.
Edmunds said average monthly payments on financed new vehicles rose to a record $772 in the quarter, up from $754 a year earlier, while the average amount financed climbed to $43,759. Average down payments fell for both new and used vehicles, and longer loan terms remained common, with nearly 21% of new-car loans stretching 84 months or longer.
Interest rates eased only slightly. The average annual percentage rate for new-vehicle loans was 6.7%, compared with 6.8% a year earlier, and just 3.1% of loans carried a 0% rate.
Looking Ahead
Looking ahead, Edmunds said affordability challenges remain, but early signs of rebalancing are emerging as prices stabilize, rates gradually decline and more off-lease vehicles return to the used-car market. About 400,000 vehicles are expected to come off lease this year, providing lower-cost options for buyers, the firm said.
