Car Loans Just Keep Getting Longer

"I really hate this story, but it is what it is, " said Car Pro Show host Jerry Reynolds.

Borrowing costs hit a new heights in the third quarter of 2026 according to Edmunds.com. Its analysts say new-car buyers financed record amounts in Q3 and stretched their loans out to historic lengths, committing to record high monthly-payments. This, even as the average APR of a new vehicle held steady at 7%. 

Edmunds' Q3 2026 data on financed vehicle purchases shows:

• NEW RECORD: Edmunds says shoppers are financing more than ever to buy new vehicles. Edmunds' data shows that the average amount financed for a new vehicle climbed to a record $44,664 in Q3 2026, compared with $44,156 in Q2 2026 and $42,744 in Q3 2025.
• NEW RECORD: According to Edmunds, more than one in four new-car buyers are now financing their vehicles for 84 months or longer. Loans with terms of 84 months or more accounted for a record 25.5% of financed new-vehicle purchases in Q3 2026, up from 23.9% in Q2 2026 and 21.8% in Q3 2025.
• NEW RECORD: New-vehicle monthly payments reached another record high. Edmunds' analysts say the average monthly payment on financed new-vehicle purchases rose to $787 in Q3 2026, up from $777 in Q2 2026 and $756 in Q3 2025.
• NEW RECORD: New- and used-car shoppers are taking on $1,000-plus monthly payments at higher rates than ever. The share of new-car buyers committing to monthly payments of $1,000 or more reached a record 21.2% of financed purchases in Q3 2026, up from 20.3% in Q2 2026 and 19.1% in Q3 2025. Among used-vehicle buyers, 6.5% took on $1,000-plus monthly payments, also an all-time high, compared with 6.3% in Q2 2026 and 6.1% in Q3 2025.
• NEW RECORD: Together, Edmunds reports that these trends are pushing borrowing costs to new all-time highs. The average total interest paid over the life of a financed new-vehicle purchase climbed to a record $9,938 in Q3 2026, up from $9,811 in Q2 2026 and $9,442 a year ago. The increase came even as the average APR for new-vehicle purchases held steady at 7.0% in Q3 2026 compared to 7.0% in Q2 2026 and 7.0% a year ago, underscoring the impact of buyers financing larger amounts over longer periods.

"What we're seeing in the data is a remarkable display of consumer resilience against a very stretched financing landscape," said Jessica Caldwell, Edmunds' head of insights. "Even as monthly payments hit record highs, loan terms stretch to historic lengths, and four-figure monthly payments become more common, buyer demand for new vehicles hasn't dropped off. Instead of sitting on the sidelines, consumers are adapting: They're allocating more of their household budgets to their vehicles, stretching out their loan terms, and becoming more proactive about shopping around for financing to find ways to make the numbers work."

Edmunds analysts note that this stretching is particularly apparent among buyers taking on the highest monthly payments. Among new-car buyers with monthly payments of $1,000 or more in Q3, 69% selected loan terms of 72 months or longer.  This is something Car Pro Show host Jerry Reynolds warns car-buyers about specifically: "Keep in mind going more than 72 months should be approached with extreme caution, " said Reynolds.

"For some shoppers, a longer loan term may be the only way to get the vehicle they need, but it's important to understand the trade-off," said Ivan Drury, Edmunds' director of insights. "Stretching out a loan shouldn't be a way to talk yourself into a vehicle that doesn't make sense for your budget when you look at the total cost. When buyers are already financing nearly $45,000 and taking on another nearly $10,000 in interest, it's critical to think beyond whether the monthly payment works today and consider what you're committing to over the full life of the loan."

Edmunds also points out that the affordability pressures reflected in its' Q3 auto finance data comes amid newly announced changes to federal fuel economy requirements.

"Any potential relief is welcome in an affordability environment like this, but changes to fuel economy requirements don't necessarily translate into lower prices on dealer lots," said Caldwell. "Automakers continue to navigate significant cost pressures, and there's still a substantial gap between where vehicle prices are today and what many households can comfortably afford."

Edmunds says its analysts recommend that shoppers consider both the monthly payment and the long-term cost when weighing their financing options.   You can calculate how various factors impact monthly payments using the Edmunds Auto Loan Calculator.  Edmunds Car Loan Interest (APR) Calculator can help shoppers understand how much interest they could pay over the life of the loan.

QUARTERLY NEW-CAR FINANCE DATA (AVERAGES) - Edmunds.com

QUARTERLY USED-CAR FINANCE DATA (AVERAGES) -  Edmunds.com