Shopping for a new ride lately? If the sticker price made your jaw hit the dealership floor, you’re not alone. Americans are borrowing more than ever to get behind the wheel, and the numbers just reached a new peak.
New car financing climbed to record levels in the third quarter, according to auto review platform Edmunds. Buyers financed bigger amounts, stretched their loans over longer periods and signed up for heftier monthly payments. Think of it as a triple crown nobody really wanted to win.
The price tag keeps climbing
Let’s start with the headline number. The average amount financed for a new vehicle reached a record $44,664 in the third quarter, Edmunds said in an Oct. 1 statement. A year earlier, that figure stood at $42,744.
That’s a jump of $1,920 in just 12 months. In other words, the typical buyer is now financing the cost of a pretty nice vacation more than they were this time last year, minus the beach and the umbrella drinks.
Seven-year loans go mainstream
Here’s where things get interesting. A record 25.5% of new vehicle financing went to loans lasting 84 months or longer during the quarter, according to Edmunds. A year ago, that share sat at 21.8%.
Eighty-four months is seven years. Seven! That’s long enough for your shiny new SUV to start showing its age well before you make the final payment. It’s the financial equivalent of a marathon, and plenty of shoppers are lacing up.
So why go long? Spreading a loan across more months is one way to keep each payment more manageable, even if it means paying off the vehicle for a much longer stretch. For a lot of buyers, that trade-off seems worth it.
Monthly payments hit a new high
Speaking of payments, those are breaking records too. The average monthly payment on a new vehicle reached $787 in the third quarter, an all-time high, according to Edmunds.
And some shoppers are blowing right past that mark. Edmunds said new vehicle buyers are increasingly agreeing to monthly payments of $1,000 or more. That’s the kind of number many people associate with rent, except this one comes with four wheels and a cup holder.
Put all three trends together, and you get the big picture: Auto borrowing costs have climbed to all-time highs. Bigger loans, longer terms and larger payments are all moving in the same direction, and that direction is up.
What the car buying boom says about shoppers
Here’s the surprising twist. Despite the eye-watering figures, Edmunds sees a silver lining. Jessica Caldwell, an assistant vice president at Edmunds Insights, said in the statement that the data reflect strong consumer resilience.
In plain English? Buyers are still showing up at dealerships and signing on the dotted line, even as costs keep rising. Demand hasn’t stalled, and shoppers are finding ways to make the math work, whether that means a longer loan or a bigger monthly bill.
So, are you thinking about trading in your current wheels? It might be worth crunching the numbers twice before you shake hands with the salesperson. Record-breaking stats are thrilling in sports, but they hit a little differently when they show up on your monthly statement.
