Fuel prices are displayed on a sign as a customer fills their vehicle at a gas station on April 13, 2026 in Miami, Florida. <\/p>\n
Joe Raedle | Getty Images<\/p>\n
Auto debt<\/a> is becoming a bigger problem for consumers<\/a>, a new report shows. <\/p>\n Total auto debt<\/a> reached $1.68 trillion at the end of 2025 \u2014 a 37% increase since late 2018, when the debt was at $1.23 trillion, according to a new analysis by The Century Foundation, a left-leaning think tank, and Protect Borrowers, a consumer advocacy group, provided exclusively to CNBC. That figure includes traditional installment loans and leases. <\/p>\n Nearly 86 million Americans \u2014 about 1 in 4 \u2014 carry outstanding auto loan or lease debt, the organizations calculated. <\/p>\n The average origination balance for an auto loan was $33,519 at the end of 2025, compared with $24,782 in the fourth quarter of 2018, the research shows. Over that same period, the typical monthly auto loan payment increased to more than $680 from $506. <\/p>\n “People are seeing more and more of their paychecks eaten by their car payments,” said Angela Hanks, chief of policy programs at The Century Foundation. <\/p>\n The surge in auto debt comes as Americans face more expensive vehicles and higher interest rates, a combination that can force them to choose between higher monthly payments and longer repayment terms.<\/p>\n Ownership costs can present additional affordability challenges. Gas prices have increased due to the war with Iran, with an nationwide average price per gallon of $4.53<\/a> as of Wednesday, according to AAA. <\/p>\n ‘Virtually no new vehicles for sale under $20,000’<\/p>\n Rising car prices<\/a> have led many families to take on more debt to get behind the wheel. The average transaction price for a new vehicle <\/a>is nearly $49,000, compared to between $35,000 and $37,000 in 2018, according to Edmunds. <\/p>\n “That’s a $12,000 to $14,000 move in less than a decade, and incomes haven’t kept pace,” said Ivan Drury, director of insights at Edmunds. <\/p>\n At the same time, the supply of affordable cars<\/a> has largely dried up, Drury said. <\/p>\n “There are virtually no new vehicles for sale under $20,000<\/a>,” Drury said. “Buyers who used to have options at the bottom of the market no longer do.”<\/p>\n Read more CNBC personal finance coverage<\/p>\n Amid an uncertain economic climate, automakers have focused on serving higher-income buyers who are immune to shocks like pandemics and wars, said Sean Tucker, a managing editor at Kelley Blue Book. <\/p>\n “In 2017, [automakers] built 36 models priced at $25,000 or under,” Tucker said. “Today? Four.”<\/p>\n More than 43% of new cars are bought by households with incomes of $150,000 or more, Tucker said. <\/p>\n “That’s a record figure,” he said. “Automakers are serving that market.”<\/p>\n $1,000 monthly auto loan bill becomes more common <\/p>\n Meanwhile, low and middle-income families are increasingly taking on bigger loans. While the average monthly auto loan payment reached $680 in 2025, the lowest-income borrowers, or those earning under roughly $35,000 a year, pay an average of $738 a month, according to The Century Foundation and Protect Borrowers. <\/p>\n Low-income borrowers carried auto loan debt balances that were nearly $4,000 higher, on average, than households with earnings above roughly $175,000, the organizations found. <\/p>\n People are seeing more and more of their paychecks eaten by their car payments.<\/p>\n Angela Hanks<\/p>\n chief of policy programs at The Century Foundation<\/p>\n<\/blockquote>\n The share of buyers who agreed to monthly auto loan payments of $1,000 or more<\/a> made up 20% of all financed new vehicle purchases in the first quarter of 2026, an increase from around 17% a year earlier, Edmunds found. <\/p>\n A larger auto debt financially squeezes many households, Drury said. “That extra money has to come from somewhere, which could be groceries, rent, savings, the emergency fund,” he said. <\/p>\n Interest rates on the rise, loan terms lengthen <\/p>\n Many borrowers are also facing higher interest rates when buying a car. <\/p>\n The average annual percentage rate for new vehicle purchases was 6.9% in the first quarter of 2026, up from 6.7% at the end of 2025, according to Edmunds. <\/p>\n But some consumers with lower credit, or a score under 580, pay interest rates over 18%, The Century Foundation and Protect Borrowers found. That could cost a person $14,000 in interest alone on a $30,000 car over a six-year loan term. <\/p>\n As consumers contend with pricey vehicles and high interest rates, extended auto loan terms are also at a record high, Edmunds found. <\/p>\n More than 1 in 5 \u2014 or 22.9%\u2014 of financed new car purchases at the start of 2026 included a loan term of seven years or longer, compared to 20.8% at the end of 2025. <\/p>\n Stretching out repayment is one way to reduce your monthly auto loan payment, but it comes with risks<\/a>. You pay more interest overall and spend more time repaying. You can also end up “underwater” on your car \u2014 meaning you owe more on it than it’s worth \u2014 a problem that can carry over<\/a> to your next car purchase. <\/p>\n “The longer these loans stretch, the harder it is to ever get out from under them,” Drury said. <\/p>\n\n