Average new car transaction prices have risen upwards of $12,000 in under 10 years. During that period, average household income hasn’t kept up at the same rate. Larger chunks of auto debt is squeezing families who may already be on the brink. A trillion-dollar number is hard to picture until you see it sitting on the country’s dashboard. Americans now owe $1.68 trillion in auto debt as of the end of 2025, according to a new report from The Century Foundation and Protect Borrowers, a 37% jump from the $1.23 trillion on the books in late 2018. The average transaction price of a new vehicle has climbed past $49,000, up from roughly $35,000 to $37,000 a decade ago. Ivan Drury, Director of Insights at Edmunds, told CNBC that this represents a $12,000 to $14,000 increase in under a decade, and average incomes haven’t kept up at the same rate. The other half of the squeeze is the disappearance of cheap cars. “There are virtually no new vehicles for sale under $20,000,” says Drury. “Buyers who used to have options at the bottom of the market no longer do.” Read: Seven-Year Car Loans Were a Red Flag a Decade Ago, Now They’re The Norm The problem is compounded by automakers targeting higher-income buyers who are comparatively less affected by external factors such as pandemics and wars, according to Sean Tucker, Managing Editor at Kelley Blue Book. He points out that “in 2017, [automakers] built 36 models priced at $25,000 or less. Today? Four. Tucker also noted that more than 43% of new vehicles are now purchased by households earning $150,000 or more, which he described as a record figure. Monthly Auto Loan Bills Hit Four Figures In the first quarter of 2026, Edmunds revealed that around 20% of all auto loan monthly payments were at or above the $1,000 mark. In 2025, this figure was 17%. Meanwhile, the average monthly auto loan payment was $680 in 2025, up from $506 in 2018, but low-income borrowers paid more than this, $738 per month on average. The report also found that low-income borrowers carried average auto loan balances nearly $4,000 higher than households earning above roughly $175,000 annually. Drury says that this can create more economic hardship for families who are already on the brink. “A larger auto debt squeezes many households. That extra money has to come from somewhere, which could be groceries, rent, savings, the emergency fund…” Higher Rates Add Pressure Interest rates have also taken a swing upwards. The average figure for the first quarter of 2026 was 6.9%, up from 6.7% by the end of 2025. However, those with credit scores below 580 could be stung for over 18% in interest. This amounts to an extra $14,000 in interest alone for a $30,000 car over a six-year loan term. One way that consumers seem to be trying to cushion that increased monthly hit is by opting for longer repayment periods. 22.9% of financed new car purchases for the first quarter of 2026 were taken under a repayment period of seven years or longer. However, such extensions of loan repayments come with their own risks. For example, you can end up paying more overall, sometimes ending up “underwater,” which means you’ve paid more in loan repayments than the car is actually worth. Drury says that “the longer these loans stretch, the harder it is to get out from under them”.
