Another financial quarter of data about American car loans is in the books, and Edmunds has published its latest analysis on what the average loans look like for new and used vehicles. Perhaps unsurprisingly, loan terms are getting longer, the amounts financed are getting bigger, and buyers are making smaller downpayments. One of the most alarming statistics in the study is that new car loans with a comma in the monthly payment are at an all-time high; 19.3 percent of new car buyers have a payment of $1,000 or more.
According to the Q2 2025 data, the average new car loan term is 69.8 months with a 7.2% APR and a $756 monthly payment. That’s a longer loan term and a higher monthly payment than Q2 2024 and Q1 2025, but that APR is actually 0.1% lower than the same period last year. The average amount financed is $42,388, and the average down payment is $6,433. That’s a higher amount financed and a lower down payment than the aforementioned quarters for comparison.
Things don’t look much better for used car loans. The used car loan term is 69.7 months, which is flat compared to the same quarter last year. Used car buyers have an average monthly payment of $559 at a 10.9% APR. As with new cars, that’s a higher monthly payment and a slightly lower APR than previously. The average amount financed is up to $29,080, and the average down payment is $4,092, which is a bit lower than it was in Q2 204.
“It would be easy to assume that tariffs are already reshaping the market, but the reality is that the record-breaking trends we saw in the second quarter are reflective of more consumers opting for maxed-out term lengths despite vehicle prices remaining steady,” Edmunds director of insights Ivan Drury said. “It’s clear that buyers are pulling the few levers they can control to manage affordability, whether that’s by taking on longer loans, financing more, or putting less money down – even if some of those decisions increase their total costs. Consumers are continuously stretching to afford new vehicles in this market, and while tariffs haven’t directly driven these Q2 numbers, they’re certainly not going to make things any easier for shoppers moving forward.”
Of course, Edmunds reminds car buyers that having a smaller monthly payment does not mean the car is cheaper. In the long run, it can mean the opposite.
“While extended loan terms may make a monthly payment more palatable, consumers need to keep in mind the risks associated with a loan extended that far into the future, including increased costs for upkeep down the line and the risk of being underwater on the loan if the car is traded in before it’s paid off,” Edmunds consumer insights analyst Joseph Yoon said. “If payments on a more standard 60- or 72-month loan don’t fit your budget, you might consider leasing. While you won’t be building equity in your vehicle the way you do with a purchase, leases afford time to get your finances in better shape with lower monthly payments in the meantime.”
Comments
Long predicted and for good reason, but the sales figures are showing that people do not care; they gotta have the shiny new metal.
Until the economy implodes.
Come on 2008 2.0!
That was good for people with cash and a steady job. I got a super deal on a new 2009 Pontiac G-6. Got $9600 off MSRP with factory rebate, GM employee discount, and GM card earnings combined. The dealership finance man said that was the most he’d ever seen come off of MSRP. Paid cash so no finance charges and I still have that car as my backup, it’s been a great vehicle.
People doing this are selfish and crazy. Mom has to have the latest crossover to drop the kids off in and dad thinks he needs a 4-door diesel HD pickup to drive to his job that doesn’t require a truck. In the meantime, their credit card balances are going up due to the high payments and no money is going into savings, 401k’s or college funds. That’s setting yourself up for failure on all future fronts and unfortunately by the time they realize the long term impacts it may be too late to fix it. These folks will likely struggle financially their entire lives, but hey, those shiny new vehicles look great sitting in the driveway!
Crazy. I’m paying $661/month for TWO cars: 2024 VW ID.4 EV and 2025 Equinox EV 2LT. Both 24 month leases with ZERO down and the $661 includes tax on both leases.
Now compare that to the “average” at 70 month loans with a $756/month payment. And many are going over $1,000/month. Pure lunacy.
Even though I have two newer cars, the VW is used strictly for ride share and it earns me about $925/month. Thus that VW pays for both car payments and my insurance. To top it off, I have zero gas bills and spend less than $50/month on charging at home at night.
Let’s poke some holes in this story shall we? First you are leasing, smart…. You will forever have a car payment, good job! Second, of that $925, you have to take out expenses of that number. I can only imagine the wear and tear your vehicle is getting by doing this, added tires, suspension wear that might get charged at lease turn in. Not to mention how quickly you are going to blow through the miles allowance of a lease. Then your time, trying to float a ride share job, you have that time factor in there. Finally, that cost to charge. You must live in A, one of the cheapest states to charge, and B, not including both vehicles and only during the summer when range is good. Doing 1,000 miles a month at the average national rate is roughly $70 a month in electricity costs for one vehicle, so the math isn’t mathing fully here with your flat $50 comment…