Record number of buyers choose long-term loans
The average transaction price for a new car hovers around $50,000, so it’s no surprise that buyers are choosing longer loans. This trend has been observed for a long time, and Ram has even introduced a 10-year/100,000-mile limited powertrain warranty, as CEO Tim Kuniskis noted that nearly 80% of new pickup truck loans exceed five years.
Five years is no longer the limit
However, five years is no longer the limit, as many buyers are moving to even longer loans. According to Edmunds, a record 36.5% of people who financed a new car in the second quarter chose a loan term of 73 months or more. That’s over six years, and this figure has risen from 27.3% in 2016.
Even more strikingly, 23.9% of borrowers signed up for loans of at least 84 months. That’s seven years and another record.
Average payment reaches $777
Despite customers choosing longer loans, the average monthly payment rose to a new record of $777. This is an all-time high for the third consecutive quarter, and it means people are paying an average of $9,324 per year.
That’s a lot of money, but 20.3% of new car borrowers in the second quarter chose payments of $1,000 or more. This ties the all-time high and is slightly higher than in the first quarter.
New car financing
| Q2 2026 | Q2 2025 | Q1 2026 | |
| Term (months) | 70.4 | 69.8 | 70.3 |
| Monthly Payment | $777 | $756 | $773 |
| Amount Financed | $44,156 | $42,388 | $43,899 |
| APR | 7% | 7.2% | 6.9% |
| Down Payment | $5,815 | $6,433 | $6,206 |
Rising debt and shrinking down payments
Given that monthly payments have reached a new record, it’s not surprising to learn that the average amount financed has also reached a new all-time high. Buyers are taking on an average of $44,156 in debt, $257 more than in the first quarter and $1,768 more than a year ago.
As if that weren’t enough, people are putting less money down as a down payment. The average down payment fell to $5,815, down from $6,206 in the first quarter and $6,433 last year. In fact, down payments now represent only 11.6% of the average total purchase price, the lowest figure in nearly six years.
Banks are profiting, as the average interest payout over the entire loan term rose to a new record of $9,811. That’s $195 more than a year ago, and the average APR for the quarter was 7%.
Used car financing
| Q2 2026 | Q2 2025 | Q1 2026 | |
| Term (months) | 70.1 | 69.7 | 69.9 |
| Monthly Payment | $576 | $559 | $559 |
| Amount Financed | $30,414 | $29,080 | $29,314 |
| APR | 10.5% | 10.9% | 10.8% |
| Down Payment | $4,016 | $4,092 | $3,993 |
Used car buyers are also paying a lot: a record 6.3% of them chose monthly payments of $1,000 or more. The average amount financed for a used car also rose from $29,080 last year to $30,414 in the second quarter. That’s enough to buy several new cars, including the Buick Envista, Chevrolet Trax, Nissan Kicks, and Toyota Corolla Cross — just to name a few.
Jessica Caldwell, head of analytics at Edmunds, noted:
“The second quarter data perfectly illustrates the harsh reality of today’s new car market: affordability is such a huge obstacle that buyers are forced to stretch their budgets to the absolute limit just to purchase a new car.”
She added that “this is the new normal for new car buyers” and noted that “consumers will have to continue walking this financial tightrope” for the foreseeable future.
This data indicates that the auto financing market is at a point where long-term commitments are becoming the norm, not the exception. The rise in average debt to $44,156 and the drop in down payments to an all-time low suggest that buyers are increasingly relying on credit to afford a vehicle. High interest rates, especially in the used car market (10.5% APR), make the total cost of ownership significantly higher, which could lead to an increase in vehicle repossessions if the economic situation worsens. The situation, where the average payment for a new car exceeds $777 per month and for a used car is $576, makes a car not just a mode of transportation, but a significant financial burden for many American families.