- One in six car buyers are taking on car loans with monthly payments in excess of $1,000.
- More than 17 percent agreed to $1,000+ payments in Q3, the sixth consecutive quarter that four-figure payments had been as prevalent.
- Edmunds says 84-month terms are becoming more popular, accounting for 18 percent of loans in Q3, up from 16 percent in Q1.
The average price of a new car in America stands at $48,000 this year, but what matters to buyers isn’t the MSRP or transaction price of their new vehicle, it’s the amount of cash that leaves their bank every month to pay for it. And for a shocking one in six US drivers, that number has four figures.
New data from Edmunds reveals that 17.4 percent of buyers signed up for monthly car loan payments of at least $1,000 in Q3, which is almost a quarter of the take-home pay you’d get from the average American salary.
Related: Average New Car Cost $48k, But Buyers Only Want To Spend $35k
And this isn’t a blip but a continuation of an existing trend. The Jul-Sep result makes it six consecutive quarters that more than 17 percent of buyers have taken on loans with $1,000+ payments.
To make new cars even vaguely affordable, dealers and buyers are increasingly turning to long, 84-month payment plans. That’s seven years. Unless you buy a car the moment it’s released, it’ll be two facelifts behind and possibly have been replaced altogether by the time you settle your debt. And you run the risk of encountering some nasty servicing and out-of-warranty bills in the later years, depending on coverage.
Average US car loans Q3 2024
Edmunds says 18.1 percent of buyers signed up for 84-month loans in Q3, a rise from 17.3 percent in Q2 and 15.8 percent in Q1of 2024. In contrast, the number of buyers taking on 60-month loans has stayed pretty consistent at around 69 percent, suggesting affordability problems resulting from high interest rates averaging 7.1 percent aren’t affecting middle- and high earners anywhere near as much as those with less well-paid jobs.
And don’t go thinking used car buyers are escaping this torture. True, they’re spending less each month (an average of $546), but they’re getting hammered with horrific 11.3 percent APR loans.
How much are you paying for your car every month? Drop a comment below and let us know how much financial pain you’re enduring and whether it’s worth it.