Car Buyers Are Taking On Bigger And Longer Loans Than Ever

More than 21 percent of financed new-car purchases now come with monthly payments of at least $1,000.

Car Loans Hit 84 Months

Photo by: Virrage Images

Anthony Alaniz

By: Anthony Alaniz

Oct 8, at 11:59am ET

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Like everything else, new-car prices keep rising. While the average price of a new car continues to hover around $50,000, the amount people finance, and for how long, is increasing.

A new report from Edmunds reveals that borrowers took out larger loans last quarter to finance their vehicle, averaging $44,664. That’s up from $44,156 in the second quarter of 2026 and from $42,744 a year ago, but that’s not all.

Just over a quarter of new-car buyers—25.5 percent—are financing their vehicles for 84 months or longer, which is up from 21.8 percent a year ago, and those monthly payments have crept up, too. The average monthly payment rose to $787 last quarter, up from $756 a year ago, and has been on an upward trend.

Even as prices rise, people are still buying new cars. Jessica Caldwell, Edmunds' head of insights, said:

‘Even as monthly payments hit record highs, loan terms stretch to historic lengths, and four-figure monthly payments become more common, buyer demand for new vehicles hasn't dropped off.'

According to Caldwell, buyers are adapting “to find ways to make the numbers work,” yet monthly payments are still rising.

The Four-Figure Monthly Payment

According to the Edmunds report, 21.1 percent of financed purchases last quarter resulted in monthly payments of $1,000 or more. They accounted for 19.1 percent of loans just one year ago.

Even used-car buyers can't avoid four-figure payments. Some 6.5 percent of loans had payments of $1,000 or more. That is up from 6.2 percent in the second quarter and 6.1 percent in Q3 2025, but the amount being financed is also increasing.

The average used-car loan last quarter reached $30,703. It was $29,660 a year ago.

What Are The Hidden Costs Of A Long Loan?

Ivan Drury, Edmunds' director of insights, said that shoppers should “understand the trade-off" between a longer loan term and the vehicle they want, and “look at the total cost.”

A longer loan could mean paying more interest to the bank, making a $45,000 vehicle cost $55,000, and, like everything else, costing buyers more. He said:

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'Stretching out a loan shouldn't be a way to talk yourself into a vehicle that doesn't make sense for your budget when you look at the total cost. When buyers are already financing nearly $45,000 and taking on another nearly $10,000 in interest, it's critical to think beyond whether the monthly payment works today and consider what you're committing to over the full life of the loan.’

According to Edmunds, the average total interest paid over the life of the loan from Q3 will cost the buyer $9,938. That’s up from $9,442 a year ago, as interest rates for new-car purchases remain unchanged at 7.0 percent.

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