Owning a car has never been cheap, but now it’s becoming a financial trap. The average monthly payment for a new car loan has climbed to $725, with borrowers locked in for nearly six years. That’s before adding insurance, gas, maintenance, and unexpected repairs. At what point does it make more sense to ditch car ownership altogether?
Rising interest rates are making things worse. With an average rate of 6.73%, buyers are paying far more than the sticker price by the time their loan is up. Stretching out payments makes the car “affordable” month to month, but it’s a costly illusion. Nearly 70% of new car buyers are taking out loans of 61 months or longer, racking up thousands in extra interest over time.
The price of a new vehicle has also skyrocketed, hitting $48,759 on average. It’s no longer just luxury models pushing prices up—everyday sedans, SUVs, and trucks are getting out of reach. Dealers and automakers are banking on customers financing everything, knowing they’ll spend years paying it off. It’s not just about the cost of the car anymore. It’s about how much they can squeeze out of you in interest.
Job security isn’t what it used to be, yet lenders and automakers expect people to commit to payments for nearly six years. Layoffs are up, wages aren’t keeping pace, and one unexpected financial hit can turn a car loan into a burden. Miss a few payments, and that shiny new car gets repossessed—along with whatever equity you thought you had.
For some, the math no longer makes sense. Rideshares, rentals, or even public transit might cost less in the long run. The auto industry has pushed the financing game to its limits, and the cracks are showing. How much more can Americans take before they stop playing along?
Sources:
https://www.edmunds.com/car-loan/how-long-should-my-car-loan-be.html
https://www.experian.com/blogs/ask-experian/what-is-the-average-length-of-a-car-loan/
https://www.autotrader.com/car-shopping/buying-a-car-what-term-should-your-loan-be-222114