Fuel prices are displayed on a sign as a customer fills their vehicle at a gas station on April 13, 2026 in Miami, Florida.
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Auto debt is becoming a bigger problem for consumers, a new report shows.
Total auto debt reached $1.68 trillion at the end of 2025 — a 37% increase since late 2018, when the debt was at $1.23 trillion, according to a new analysis by The Century Foundation, a left-leaning think tank, and Protect Borrowers, a consumer advocacy group, provided exclusively to CNBC. That figure includes traditional installment loans and leases.
Nearly 86 million Americans — about 1 in 4 — carry outstanding auto loan or lease debt, the organizations calculated.
The average origination balance for an auto loan was $33,519 at the end of 2025, compared with $24,782 in the fourth quarter of 2018, the research shows. Over that same period, the typical monthly auto loan payment increased to more than $680 from $506.
“People are seeing more and more of their paychecks eaten by their car payments,” said Angela Hanks, chief of policy programs at The Century Foundation.
The surge in auto debt comes as Americans face more expensive vehicles and higher interest rates, a combination that can force them to choose between higher monthly payments and longer repayment terms.
Ownership costs can present additional affordability challenges. Gas prices have increased due to the war with Iran, with an nationwide average price per gallon of $4.53 as of Wednesday, according to AAA.
‘Virtually no new vehicles for sale under $20,000’
Rising car prices have led many families to take on more debt to get behind the wheel. The average transaction price for a new vehicle is nearly $49,000, compared to between $35,000 and $37,000 in 2018, according to Edmunds.
“That’s a $12,000 to $14,000 move in less than a decade, and incomes haven’t kept pace,” said Ivan Drury, director of insights at Edmunds.
At the same time, the supply of affordable cars has largely dried up, Drury said.
“There are virtually no new vehicles for sale under $20,000,” Drury said. “Buyers who used to have options at the bottom of the market no longer do.”
Amid an uncertain economic climate, automakers have focused on serving higher-income buyers who are immune to shocks like pandemics and wars, said Sean Tucker, a managing editor at Kelley Blue Book.
“In 2017, [automakers] built 36 models priced at $25,000 or under,” Tucker said. “Today? Four.”
More than 43% of new cars are bought by households with incomes of $150,000 or more, Tucker said.
“That’s a record figure,” he said. “Automakers are serving that market.”
$1,000 monthly auto loan bill becomes more common
Meanwhile, low and middle-income families are increasingly taking on bigger loans. While the average monthly auto loan payment reached $680 in 2025, the lowest-income borrowers, or those earning under roughly $35,000 a year, pay an average of $738 a month, according to The Century Foundation and Protect Borrowers.
Low-income borrowers carried auto loan debt balances that were nearly $4,000 higher, on average, than households with earnings above roughly $175,000, the organizations found.
People are seeing more and more of their paychecks eaten by their car payments.
Angela Hanks
chief of policy programs at The Century Foundation
The share of buyers who agreed to monthly auto loan payments of $1,000 or more made up 20% of all financed new vehicle purchases in the first quarter of 2026, an increase from around 17% a year earlier, Edmunds found.
A larger auto debt financially squeezes many households, Drury said. “That extra money has to come from somewhere, which could be groceries, rent, savings, the emergency fund,” he said.
Interest rates on the rise, loan terms lengthen
Many borrowers are also facing higher interest rates when buying a car.
The average annual percentage rate for new vehicle purchases was 6.9% in the first quarter of 2026, up from 6.7% at the end of 2025, according to Edmunds.
But some consumers with lower credit, or a score under 580, pay interest rates over 18%, The Century Foundation and Protect Borrowers found. That could cost a person $14,000 in interest alone on a $30,000 car over a six-year loan term.
As consumers contend with pricey vehicles and high interest rates, extended auto loan terms are also at a record high, Edmunds found.
More than 1 in 5 — or 22.9%— of financed new car purchases at the start of 2026 included a loan term of seven years or longer, compared to 20.8% at the end of 2025.
Stretching out repayment is one way to reduce your monthly auto loan payment, but it comes with risks. You pay more interest overall and spend more time repaying. You can also end up “underwater” on your car — meaning you owe more on it than it’s worth — a problem that can carry over to your next car purchase.
“The longer these loans stretch, the harder it is to ever get out from under them,” Drury said.
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