What used to be a manageable monthly expense has become one of the most painful parts of household budgets. Across the United States, the average new car payment has surged to more than $750 a month. In many cases it is even higher. On top of that, a surprising and troubling trend is spreading through the auto market. Car loans that once lasted four or five years are now stretching to eight, nine and even ten years. Some loans are reaching 100 months or more.
This is not a small financial inconvenience. It is a major shift in how Americans buy and pay for one of the most essential parts of modern life.
How Cars Became Shockingly Expensive
The biggest reason for these huge payments is the explosion in vehicle prices. Since 2020, new car prices have jumped more than 30 percent. For the first time, the average price of a new vehicle has broken the fifty thousand dollar mark. Before the pandemic, the typical price was less than thirty eight thousand dollars.
For a while, many buyers were able to live with those rising prices. Some had delayed purchases during the pandemic when supply shortages limited availability. Others felt financially secure and chose luxury vehicles, pushing average prices even higher. But inflation, higher prices for everyday necessities, and rising interest rates eventually caught up. As one headline explained, the average payment has climbed so high that the market “finally became impossible to ignore.”
At a Dodge and Jeep dealership near Philadelphia, owner David Kelleher described the situation bluntly. “We do not have three hundred dollar monthly payments any longer in new vehicles,” he said. “It is a thing of the past.” His comment captures how dramatic the change has been for ordinary families.
Payments That Shock Buyers and Stretch Budgets
Industry data shows how dramatic this new normal has become. J.D. Power reported that the average new car payment in November was about seven hundred sixty dollars. Experian found that the average new car payment through the third quarter was around seven hundred forty eight dollars. Even used cars are far from cheap. The average used car payment is more than five hundred thirty dollars per month, with interest rates above eleven percent for many buyers.
These are numbers that would have seemed unbelievable a decade ago. Yet today they are routine.
The Rise of the Ultra Long Car Loan
As prices climbed, loan terms stretched to keep payments from completely crushing buyers. What used to be a standard four or five year loan shifted to six and seven years. Today, one third of new car buyers are taking out loans lasting at least seventy two months. Loans of eighty five to ninety six months are also rising.
Then came the newest development. The 100 month car loan.
Some lenders now promote these nearly ten year loans, especially for large trucks and expensive vehicles. The appeal is obvious. Lower monthly payments make cars seem affordable. Finance experts, however, warn that the hidden cost is massive.
Financial adviser Eric Croak did not hold back on his opinion. “I do not think it is necessary to sugarcoat,” he said. “Eight years and four months of debt in exchange for something that you will likely lose twenty percent of value on before you get to change the oil for the second time is just madness.”
The math supports his warning. A fifty thousand dollar car loan at five percent over five years costs around nine hundred fifty dollars per month and about six thousand six hundred dollars in interest. Stretch the same loan to 100 months and the payment drops to about six hundred dollars, but the total interest cost explodes to more than eleven thousand dollars.
Debt Is Piling Up and Americans Are Struggling
This growing dependence on long loans has led to record levels of total auto debt. Americans now owe about 1.66 trillion dollars in car loans, almost 300 billion dollars more than just five years ago.
As inflation and living costs rise, many households are falling behind. Auto loan delinquencies are now near fifteen year highs. The Federal Reserve has noted that higher monthly payments are a major reason people are slipping behind.
Fewer Affordable Cars and Growing Frustration
Another reason for this crisis is the shrinking number of affordable new vehicles. Automakers have largely stepped away from models priced under thirty thousand dollars. Heath Byrd, chief financial officer of Sonic Automotive, warned that this lack of entry level cars is creating real danger. “It is a real concern, to be quite honest,” he said.
There are signs that consumers desperately want lower cost options. Ford says buyers are moving toward cheaper base trim packages. Sales of its budget friendly Maverick pickup jumped dramatically, increasing more than 40 percent year over year in one report and 76 percent in another timeframe reported by the company. Jeep, which struggled during the pandemic because of high pricing, lowered prices by thousands of dollars on many vehicles. Jeep CEO Bob Broderdorf said the brand saw an 11 percent sales increase as a result, explaining that “the entire problem we have in the industry right now is rising prices, rising inflation of everything.”
Even the federal government is paying attention. President Trump has directed regulators to explore ways to allow smaller, cheaper vehicles to enter the U.S. market, including tiny cars that currently do not meet safety standards. The goal is simple. Cars must get cheaper again.
For many Americans, this shift still feels unreal. Steve Levy, a 62 year old wealth management adviser in Texas, was shocked when he returned to the car market. He remembers when a four year loan felt long. “The fact you can go out as long as you can go now is actually stunning to me,” he said. His reaction reflects what millions of buyers are experiencing.
A Market That Outran Incomes
The rise of the 100 month loan is more than a financial curiosity. It is a warning sign. It shows that car prices have outpaced incomes, and buyers are being pushed into longer and riskier debt just to own transportation. Cars are lasting longer, but not enough to justify almost a decade of payments for most households.
Industry leaders like Chase Auto executive Michael Douglas urge people to think beyond the monthly number. “When consumers are deciding what loan term makes the most sense for them, it is important to consider the total cost of car ownership, not just the price of the car at purchase,” he said.
The American car market now forces buyers to choose between massive payments or nearly endless loans. Many have little choice, because cars are essential for work, school, family life and basic living. The question is no longer whether payments are high. It is whether this system is sustainable at all, and whether automakers and policymakers will finally take serious steps to make cars affordable again.
