Nearly 20% of American car buyers have a monthly car loan payment of over $1,000
Car buying is difficult enough without worrying about how you could possibly swing that ever-growing monthly car loan payment. Unfortunately for the American car buyer, though, more and more borrowers are dealing with four-digit monthly payments.
Think your car loan payment is too high? Almost 20% of American buyers are paying over $1,000 per month
The second quarter of 2025 wasn’t a great one for the American car shopper. Sure, shoppers kept buying and borrowing, but car loan payments reached record highs.
As of Q2 2025, nearly 20% of buyers had a new car loan monthly payment of $1,000 or more. Considering the average pay for an adult worker in the United States is around $4,865 per month, borrowers are spending over one-fifth of their take-home pay on a monthly car payment.
It’s not just that alarming $1,000 number, either. A greater number of borrowers are opting for longer-term loans, which means they’re paying more overall to reduce their monthly payment.
According to data from Edmunds, over 22% of borrowers are opting for seven-year car loans. Pair that figure with record-breaking interest rates, and car shoppers are paying more than they have for their vehicles in quite some time.
Buy smart or end up ‘underwater’
Joseph Yoon, Edmunds’ consumer insights analyst, warns about the dangers of lengthier loans. “While extended loan terms may make a monthly payment more palatable, consumers need to keep in mind the risks associated with a loan extended that far into the future, including increased costs for upkeep down the line and the risk of being underwater on the loan if the car is traded in before it’s paid off,” he added.
It’s precisely the sort of thing that leaves borrowers “underwater” in a loan, the scenario wherein a car buyer owes more money in a loan than the vehicle is worth. Granted, borrowers still have options.
For instance, a buyer can still trade in a vehicle if they’re underwater on the loan, but their down payment won’t have the desired impact. Instead, it will reduce the negative equity on the underwater balance, and any remaining balance will become part of the new loan.
So, what can you do? In short, don’t overextend yourself to purchase an unrealistic vehicle. You should be able to comfortably afford your monthly payment with a shorter-term loan, like a five-year term. If you can’t, you’re likely spending too much.
