The average car loan length is “close to six years” according to American personal finance company NerdWallet. In those six years, drivers can rack up over $10,000 in interest costs.
What’s more, a growing share of Americans are taking on exceptionally high car payments, with new data from Edmunds showing record numbers of buyers committing to monthly notes of $1,000 or more.
In the fourth quarter of 2025, 20.3% of new‑car shoppers agreed to monthly payments topping $1,000 — the highest share ever recorded, according to the auto research firm.
The figure is up from 19.1% in the previous quarter and continues a steady climb driven by elevated vehicle prices and persistently high borrowing costs.
The trend isn’t limited to the new‑car market. Used‑vehicle buyers also set a new record, with 6.3% taking on payments above $1,000 a month. That’s up from 6.1% in the third quarter of 2025 and well above levels seen a year earlier.
Edmunds analysts said the milestone underscores the financial strain many consumers faced throughout 2025 as they stretched loan terms, financed larger amounts, and absorbed higher interest rates to secure a vehicle in a still‑expensive market.
Some lenders offer car loans of up to 96 months. The major difference between loan terms is the amount of interest accrued over time. Larger loans also rack up larger interest payments.
A 9% APR on a car loan of just $35,000 can accrue a total interest cost of $12,302, according to NerdWallet. The average new vehicle price is closer to $50,000 than $35,000.
Lengthier car loans are allowing buyers to afford new cars despite rising prices. Not every American car buyer is fully aware of just how much extra money they’re going to pay to satisfy the loan’s terms.
For example, the 2026 Toyota RAV4 has a starting price of $31,900 before any taxes, fees and additional costs. If a driver puts 20% down on the 2026 RAV4, or $6,380, they’ll need an auto loan of at least $25,520 to fully cover the cost of the new small SUV.
The average new car auto loan rate is 6.51% for drivers with a credit score between 661 and 780. A 48-month auto loan on $25,520 with a 6.51% APR works out to $1,661.35 in annual interest, not including additional taxes and fees. A driver that secured a loan with these terms would rack up $6,645.40 in interest by the time it was paid off, bringing the cost of financing the 2026 Toyota RAV4 to $38,545.
An 84-month loan with the same 6.51% APR works out to a whopping $11,629.45 in total interest costs by the time the car is paid off. That’s an interest cost difference of $4,983,95 for three more years of loan payments without adding the actual cost of the vehicle itself. An 84-month auto loan would bring the total price of financing the 2026 Toyota RAV4 to $43,529, which is wildly different from its starting MSRP.
Between rising new car costs, sky-high new average monthly payments, and drivers opting for longer loan terms, it isn’t an ideal time to buy a brand-new car without a serious plan. On the other hand, average auto loan rates for used cars are much higher than for new cars, according to U.S. News & World Report. Should car buyers go for a new vehicle or purchase a pre-owned model?
Ultimately, interest rates and lengthy loan terms can force drivers to pay thousands of dollars over the vehicle’s purchase price on both new and used vehicles. As for value for the money, used cars still have an edge over new cars. “Significantly more used cars than new cars are sold each year,” said consumer review and news site ConsumerAffairs.
New vehicles depreciate quickly, losing a percentage of their value and making most models more affordable for consumers. Calculating total interest cost before entering an auto loan agreement can save thousands of dollars.

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