07:10 07-01-2026

Record $1k car payments signal a worsening U.S. affordability squeeze

The U.S. new-vehicle market is flashing a clear affordability warning. According to Edmunds, in Q4 2025 a record 20.3% of buyers took on a new car with a monthly payment of $1,000 or more. That share rose from the previous quarter and sits well above the level a year earlier, pointing to a steady pattern rather than a one-off spike.

Average monthly payments on new-car loans also set an Edmunds high at $772, while the average amount financed reached $43,759. Interest rates remain elevated by historical standards, even after a slight retreat: the average APR is 6.7%. More shoppers are leaning on longer terms to make payments manageable: loans of 84 months or more accounted for 20.8% of all financed purchases, and 0% offers were rare at just 3.1%. It’s a familiar trade-off—smaller installments today in exchange for a longer, heavier debt tail.

Pricing adds to the squeeze. Cox Automotive/Kelley Blue Book pegs November’s average transaction price for a new vehicle in the U.S. at $49,814, up 1.3% year over year, with demand notably concentrated among higher-income households. Unsurprisingly, many turn to used cars, yet the bar is rising there too: Edmunds notes a record 6.3% of used-car buyers now face monthly payments of $1,000 or more. When even the fallback option grows this costly, the path into a car narrows for a broad swath of shoppers.