Simply said, Americans are amassing considerable vehicle debt. The Detroit Free Press claims that vehicle prices are going up, in addition to loan lengths getting longer. One in five US car buyers is presently paying auto payments exceeding $1,000. Specifically, 19.3% of Americans pay this amount monthly for their auto loans, an increase from the second quarter of 2024, when around 17.3% of Americans were in the same situation.
We spend more money over extended periods just to maintain the capacity to buy the same cars, as costs keep increasing. Essentially, this is a scenario that will only last so much longer. Simultaneously, the average monthly payment that US car buyers pay, hovers just under $1,000, which is still an astounding number. On average, Americans are spending about $756 each month on their auto loans, an increase of $16 from the summer of 2024. Ivan Drury of Edmunds, who The Free Press spoke with, remarked that purchasers are selecting longer loan terms to control their payments.
Extending the loan term usually results in more interest paid over time and less money put toward the principal amount of the loan, even if it lowers the monthly payment. A stunning 22.4% of new vehicle financing loans made in the second quarter of this year were spread over 84 months or more. With an 84-month loan, this creates a new record and suggests that the US car buyers could be committed for almost ten years.
Buying a fresh car today for US car buyers with an 84-month loan would have payments finished by July 2032. Longer loan terms are also becoming more and more common. To summarize, the median new car loan is around 69.8 months long, with a 7.2% APR and a monthly payment of around $756. The average loan period with a 7.3% APR was 69 months one year ago.
Learn more about the new tariffs and their impact on auto import according to the recent US policy adjustments.
