On the Dash:
- Auto debt hit $1.68 trillion in 2025, with average payments topping $680/month.
- The average new car prices near $50,000, as only four models start under $25,000.
- Dealers should look to flexible financing, incentives, and pre-owned options to meet the moment.
Americans’ auto loan debt is rising to record levels, surging to $1.68 trillion at the end of 2025, a 37% increase from 2018. A quarter of all Americans now carry outstanding loan or lease debt, and the average car payment has risen to $680 a month. That’s according to new data first reported by CNBC from The Century Foundation, and Protect Borrowers.
The credit crisis is putting pressure on dealers to find flexible lending options as buyers become increasingly stretched and the average new-car price nears $50,000.
New car prices up 35% from 2017
Higher interest rates and more expensive cars are driving the surge in debt. The average price of a new car in the U.S. hovers between $49,000 and $50,000 as of early 2026, according to Kelley Blue Book, a 35% increase from 2018 when the average price was about $36,000.
The increased prices are effectively shrinking the buyer pool, as more shoppers consider used cars. In 2017, there were more than 35 models priced under $25,000; today, there are just four.
Low-income borrowers carried the biggest burden
The average APR for new vehicles was 6.9% in the first quarter of 2026, up from 6.7% at the end of 2025, according to Edmunds. In 2017, buyers were getting rates around 5.0% for a 60-month term, also according to Edmunds.
Borrowers with challenged credit are paying much more. Those with credit scores under 580 are paying rates above 18%, according to data from The Century Foundation and Protect Borrowers. On a $30,000 car financed over six years, that translates to $14,000 in interest alone.
Low-income borrowers carry the heaviest burden. Borrowers earning under $35,000 a year had car payments of $738 a month on average, $58 more per month than the overall average. They also carried balances nearly $4,000 higher than households earning over $175,000 annually.
Where there’s a crisis, there’s opportunity
The debt crisis is reshaping how buyers shop for cars, and it’s an opportunity for dealers to rethink their strategy to meet the moment.
Dealers with strong used and certified pre-owned inventory at the $15,000 to $25,000 price point are positioned to capture a growing segment of buyers priced out of the new-vehicle market.
With average APRs at 6.9% and subprime borrowers paying above 18%, manufacturer-backed low, or 0% financing incentives carry more weight than ever for buyers who qualify.
Knowing your customers’ credit situation has never been more important. Dealers who shape the buying experience around what the buyer can actually afford can build customer relationships that last longer than the trade cycle.
Dealers who adapt and close the right deals, not just the most deals, are the ones best positioned to find sustained success as the credit crisis continues.
