U.S. Auto Loan Debt Just Hit a Record $1.68T, and It’s Worse Than It Looks

Eighty-six million Americans owe a record $1.68 trillion in auto loan debt, according to a report from The Century Foundation and Protect Borrowers. 

Using an analysis of consumer credit panel data, the report reveals that the average new auto loan in 2025 was $33,519, which is $10,000 higher than in 2018. 

Monthly payments on auto loans were up to an average of $680 per month, an increase of 38% since 2018. Lower-income borrowers face even higher monthly payments at an average of $738 per month, according to the report. 

Car Prices Are Climbing

So auto loans and monthly payments are both climbing, which makes sense because so are new car prices. The average cost of a new car is almost $50,000. 

According to Edmunds, the average transaction price for new cars in March was $48,845, and the average transaction price for used cars was $25,839. Also in March, the manufacturer’s suggested retail price (MSRP) for new cars topped $50,000 at $51,074.

Turning to Extended Auto Loans

With vehicles so expensive, many borrowers are extending the length of their auto loans to lower the amount of their monthly payment.

They are taking out loans of seven years or even longer. The share of new auto loans with terms of seven years or longer has roughly doubled since 2018, reaching 14.7% of new loans, or nearly 13 million borrowers.

“As auto prices and interest rates have soared, millions of families have been forced to turn to costly, extended-term loans in order to keep up with their monthly payments.” said Angela Hanks, Chief of Policy Programs at The Century Foundation and co-author of the report.

Choosing an extended length on an auto loan may add thousands of dollars to the cost of the loan. According to the report, these loans make up 18.6% of a car buyer’s monthly income. This much auto debt is causing financial strain with some borrowers turning to credit cards to cover everyday essentials.

The report found that among middle-income borrowers, credit card balances grew 31% for those with auto debt, compared with 17% for those without auto debt. This suggests taking out one major debt, like an auto loan, can lead to higher balances in other forms of debt, like credit cards. 

A Look At Who Is Borrowing More on Their Auto Loans

When it comes to auto loans, the lowest-income borrowers tend to finance more and rural communities take out more auto loans.

Lowest-income borrowers carry $4,000 more in auto loan debt than high-income borrowers. These lowest-income borrowers carry an average balance of $28,832 on their auto loans, often because they lack the liquidity to make larger down payments.

The report points to states — including Texas, Alaska, Louisiana, and Florida — where driving is often more necessary as having some of the highest levels of auto debt. Wherever people are with their auto loans, a hefty payment impacts the rest of their finances.

“That extra money has to come from somewhere, which could be groceries, rent, savings, the emergency fund,” Ivan Drury, Director of Insights at Edmunds, recently told CNBC.

And don’t forget about gas. As of May 11, the national average gas price was $4.52, according to AAA. All drivers, but especially those with long commutes to work, are feeling the costs of high gas prices.

The Bottom Line

Auto loan debt reached a record high of $1.68 trillion. New car loans reached an average of $33,519 and monthly payments were an average of $680 a month. New car prices hovered close to $50,000.

To lower monthly car payments to a more manageable amount, some car buyers are taking out car loans with seven-year terms. These extended loan terms add thousands of dollars to the cost of an auto loan.