Car buyers across the country just set a record in the second quarter when it comes to new vehicle monthly payments. More and more folks are opting for incredibly long-term loans that still carry high monthly payments, because cars are just so damn expensive these days.
Now, the share of new-vehicle buyers who are spending over $1,000 is at 19.3%. That works out to one in every five customers handing over a band every month for their new car, according to a report from the Detroit Free Press. That’s up from 17.8% in Q2 of 2024, and now the average monthly payment is a whopping $756 (up $16 from the same time last year). I don’t know where you’re all getting this money, but I know it can’t be sustainable.
Freep, who spoke with Ivan Drury, director of insight over at Edmunds, said car buyers are taking out longer-term loans to get payments low enough to be able to afford them. In the second quarter, 22.4% of new-vehicle financing loans were 84 months or longer. That’s apparently a new record, and it means someone who buys a car today will be paying it off until July of 2032. That’s just preposterous. These super-long loans are just becoming more and more popular, too. Just a year ago, they only made up 17.6% of new vehicle financing deals.
Edmunds’ data is also showing that bigger loans are becoming the new normal. Now, the average amount financed for a new vehicle is about $42,400 — an all time high — and up from about $40,900 just a year ago.
Looking at the big picture, the average new car loan was 69.8 months with a 7.2% APR. A year ago, it was an average of 69 (nice) months and 7.3% APR.
What is going on?
There are a lot of factors leading up to this worrying payment phenomenon, as Drury explained to the Detroit Free Press:
“It’s clear that buyers are pulling the few levers they can control to manage affordability, whether that’s by taking on longer loans, financing more, or putting less money down — even if some of those decisions increase their total costs,” said Drury, Edmunds’ director of insights.
Drury said the tariffs have not yet directly driven up second-quarter prices but, “they’re certainly not going to make things any easier for shoppers moving forward.”
Things aren’t much better for used cars, either. The outlet says that in Q2, the average length of a loan on a used car was 69.7 months — about the same as it was a year ago. The average APR was down a few ticks from 11.5% to 10.9%. Still, though, the monthly payment was $7 higher at $559 per month. That’s because the average amount financed rose by nearly $1,000 to $29,080 for used vehicles.
In a world of financing nightmares, Jalopnik has you covered. We just broke down what you need to know if you want to trade in a financed car. We’ve also told you about financing horror stories like this poor dude who is underwater on his GMC Hummer EV and someone who financed a Kia EV9 at nearly 11% APR. We’ve also talked about someone who has a diabolical 27.9% loan on their Volvo. It’s scary out there, folks. Be careful. Don’t overextend yourself for a car.
