More Car Buyers Opt for Longer Loans Amid Rising Monthly Payments
A growing number of new-car buyers are taking out longer-term loans to afford vehicles as monthly payments and financing amounts reach record highs. According to Edmunds, over a quarter (25.5%) of financed purchases in Q3 had loan terms of 84 months or more, up from 21.8% the previous year. The average monthly payment hit $787, while the amount typically financed reached $44,664 — both record levels driven by higher vehicle prices and borrowing amounts. Analysts warn that these trends signal financial strain on consumers. Joseph Yoon of Edmunds noted that stretching payments over longer periods may indicate vehicles are beyond buyers' budgets. Meanwhile, broader economic pressures like inflation and rising gasoline costs continue to squeeze household spending power. With auto loan rates remaining at 7% in Q3 and expected to rise further due to elevated bond yields, the financial burden on borrowers is likely to increase. The average new-car transaction price reached $50,089 as of August, up from a year earlier. Experts suggest alternatives like buying used or saving for larger down payments could help mitigate debt pressure.
Topics: Auto Loans Car Debt Financing Behavior Vehicle Prices