2025 was a year of intense pressure for new-car buyers with affordability issues driving up prices across the board. Demand for new vehicles declined a bit, but there were still plenty of Americans willing to do whatever they needed to finance a new car. In fact, a growing number of consumers are committing to four-figure monthly payments just to get behind the wheel.
According to the latest analysis from Edmunds, an unprecedented 20.3 percent of all financed new-vehicle purchases in Q4 2025 came with a monthly payment of $1,000 or more. This record-breaking figure, up from 19.1 percent in the third quarter, paints a stark picture of the affordability issues that will continue to define the automotive market in 2026
Affordability Challenges Not Letting Up
The surge in high-dollar payments was accompanied by several other record-setting metrics. The average monthly payment for a new vehicle climbed to an all-time high of $772, while the average amount financed also reached a new peak at $43,759. Even the used market was not immune, with a record 6.3 percent of used-vehicle buyers also taking on monthly payments exceeding $1,000.
“Auto financing trends in the fourth quarter underscored just how challenging 2025 was for car shoppers,” said Ivan Drury, Edmunds’ director of insights. “Faced with persistently high vehicle prices and borrowing costs, many consumers were forced to adapt by financing larger amounts, stretching loan terms and, increasingly, taking on four-figure monthly payments.”
Loans Aren’t Just Getting More Expensive, They’re Also Getting Longer
One of the primary tools consumers used to manage the increasing loan costs was extended loan terms. While the share of 84-month or longer loans dipped slightly from the previous quarter, it still accounted for 20.8 percent of all financed new-car purchases. This figure remains significantly higher than the 17.9 percent share seen in Q4 2024, as consumers start to rely on longer financing periods to make monthly payments more manageable.
Even if it means paying more in interest over the life of the loan.
Auto Loans in 2026 and Beyond
Interest rates offered a small glimmer of relief but remained near historically high levels. The average annual percentage rate (APR) for new-vehicle financing eased modestly to 6.7 percent in Q4, down from 7.0 percent in Q3. However, attractive manufacturer incentives remained scarce, with just 3.1 percent of new-vehicle loans carrying a zero percent rate. The average down payment on a new car was $6,228, a decrease from the $6,856 seen a year prior, suggesting that some buyers had less cash to bring to the table.
“Entering 2026, many of the affordability pressures that defined 2025 are still in place, including elevated new-vehicle prices and ongoing economic uncertainty,” said Drury. “That said, there are early signs of rebalancing ahead. New-vehicle prices remain high but are beginning to stabilize, lower interest rates could offer some relief for both new- and used-vehicle shoppers, and an increase in off-lease returns is expected to provide more affordable alternatives in the used market.”
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