Consumers Are Left Holding the Bag From Surging Car, Gas Prices and Sky-High Interest Rates

Report Finds Prevalence of 7-Year Loans Has Doubled, With 13 Million Borrowers Paying on Average $6,000 More in Interest

May 6, 2026 | WASHINGTON, D.C. — The Century Foundation and Protect Borrowers today released a new report showing that 86 million Americans owe a staggering $1.68 trillion in auto loan debt, with auto debt now reaching the highest level ever recorded. The analysis of nationwide consumer credit panel data finds that the average auto loan reached $33,519 in 2025—$10,000 higher than in 2018—with monthly payments increasing by nearly 40 percent since 2018 to a record $680 on average, due in part to Trump Administration tariffs that have led to the average cost of a new car reaching nearly $50,000.

The study finds that rising car costs are pushing working families to resort to taking on longer term auto loans in an effort to bring down monthly payments. The prevalence of more expensive and riskier 7-year (or longer) auto loans has doubled since 2018, reaching 14.7 percent of new loans, or nearly 13 million borrowers. However, these extended length auto loan products add thousands in additional costs over the life of the loan ($5,868 in additional interest compared to a typical 4-year loan)—costs that are borne by the most vulnerable borrowers. For borrowers with extended loan terms, affordability challenges persist, with auto loan payments making up 18.6 percent of their monthly income. The report finds that increasingly expensive auto debt is accelerating household financial strain, forcing families to turn to pricey credit products to cover everyday essentials, with credit card balances among borrowers with auto loans growing nearly twice as fast as balances for people without auto debt.

State-by-state fact sheets that provide a glimpse into the growing auto loan debt crisis in each state are available here.

“For the overwhelming majority of working families, a car is a necessity—yet purchasing a car has become a financial trap, eating up more of people’s paychecks than ever before,” said Angela Hanks, Chief of Policy Programs at The Century Foundation and co-author of the report. “As auto prices and interest rates have soared, millions of families have been forced to turn to costly, extended-term loans in order to keep up with their monthly payments. And while families drown, the Trump Administration is refunding big businesses for the tariffs that consumers paid, with interest.”

“The costs of purchasing and financing a car have been going up for years. Unfortunately, the Trump Administration’s reckless actions on the economy and the expensive fallout from the war in Iran has made it harder for working families to purchase a car and has left millions more feeling major pocket pain at the pump,” said Tara Mikkilineni, Senior Fellow at Protect Borrowers and co-author of the report. “For millions of working families, a car is not a luxury, it is an essential economic lifeline. Working families deserve relief and they deserve to have a government that is watching out for them, not allowing lenders and auto dealers to rake in record profits at their expense.”

Key Findings

UNPRECEDENTED LEVELS OF AUTO DEBT

  • Auto loan debt has exploded to a record $1.68 trillion, a 37 percent surge since 2018, pushing 86 million Americans deeper into financial pain
    • Auto debt is now the highest ever recorded and comprises 36 percent of all non-mortgage consumer debt
  • New auto loans are more expensive than ever—reaching $33,519 by the end of 2025, $10,000 higher than in 2018, due to increases in car prices and historically high interest rates
    • The average monthly auto payment reached $680 in 2025, a 38 percent jump from 2018
  • Lower-income auto loan borrowers are particularly feeling the financial pain of rising auto costs, paying even higher monthly payments of $738 on average

THE RISE OF THE 7-YEAR LOAN TRAP

  • To cope with skyrocketing car prices, the prevalence of riskier 7-year (or more) auto loans has doubled since 2018, reaching 14.7 percent of new loans (or nearly 13 million borrowers)
    • An extended 7-year loan adds $5,868 in interest compared to a 4-year loan (assuming average loan balance at 9.9% APR)

AUTO DEBT IS ACCELERATING HOUSEHOLD FINANCIAL STRAIN

  • Credit card balances grew 31 percent for middle-income borrowers with auto loans, compared to just 17 percent for those without auto debt
    • Borrowers with extended auto loans (7+ years) are carrying credit card balances nearly double their monthly earnings (190 percent)
  • Borrowers with 7+ year auto loans are spending 20 percent of their monthly income on car payments, forcing them to put other essentials like groceries on credit cards with even higher interest rates

INTEREST COSTS OUT OF CONTROL

  • For a typical $30,000 car loan over 6 years, a borrower with poor credit (deep subprime) will pay $14,000 in interest alone—equivalent to the cost of child care for an entire year or 6 months of groceries for a family of 4
    • Those with those lowest credit scores pay an average APR of 18.7 percent—3x higher than super-prime borrowers (6.3 percent)

GEOGRAPHIC + DEMOGRAPHIC DISPARITIES

  • Low-income borrowers carry $4,000 more auto debt than high-income borrowers, with an average balance of $28,832
  • Rural communities and states where driving is most necessary—like Texas, Alaska, and Florida—struggle with the highest auto debt levels
  • Black, Hispanic, and American Indian borrowers are given higher interest rates on auto loans across all credit tiers

This report is the latest in a series on the role that rising household debt plays in our economy from The Century Foundation and Protect Borrowers. Previous reports dig into the impact of utility debt, student loan debt, and credit card debt on families trying to make ends meet.

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About The Century Foundation

The Century Foundation (TCF) is a progressive, independent think tank that conducts research, develops solutions, and drives policy change to make people’s lives better. We pursue economic, racial, gender, and disability equity in education, health care, and work, and promote U.S. foreign policy that fosters international cooperation, peace, and security. TCF is based in New York, with an office in Washington, D.C. Follow the organization on Twitter at @TCFdotorg and learn more at www.tcf.org.

About Protect Borrowers

Protect Borrowers (formerly Student Borrower Protection Center) is a nonprofit organization led by a team of experts, lawyers, and advocates fighting to build an economy where debt doesn’t limit opportunity. We investigate financial abuses, take predatory companies to court, and push for policies to protect working people from debt traps. We aim to deliver immediate relief to families while building power, driving systemic change, and fighting for racial and economic justice.

Learn more at protectborrowers.org or follow us on social @BorrowerJustice.