SANTA MONICA, Calif. — Auto lenders closed out 2025 facing a borrower base under growing strain, as record monthly payments, higher balances, and longer loan terms reshaped new-vehicle financing in the fourth quarter, according to new data from Edmunds.
The share of new-car buyers taking on $1,000-plus monthly payments climbed to a record 20.3% of all financed purchases in Q4 2025, up from 19.1% in Q3 and 18.9% a year earlier. Used-vehicle financing followed a similar trajectory, with 6.3% of buyers committing to four-figure monthly payments, also a record.
Average payments rose in tandem. Edmunds said the average monthly payment for financed new vehicles hit an all-time high of $772 in Q4, up from $754 in both Q3 2025 and Q4 2024. Borrowers are also financing more principal than ever: the average amount financed reached $43,759, compared with $42,647 the prior quarter and $42,113 a year earlier.
To offset those higher balances, consumers continued leaning on extended terms. Loans of 84 months or longer accounted for 20.8% of financed new-car purchases in Q4. While down slightly from 22% in Q3, the share remained well above 17.9% in Q4 2024, highlighting how stretched loan structures have become.
Interest rates offered limited relief. The average APR for new-vehicle loans eased to 6.7%, down from 7% in Q3 and 6.8% a year earlier, but remained near historically elevated levels. Promotional financing stayed scarce, with just 3.1% of new-vehicle loans carrying a 0% rate, compared with 3.3% in Q3 and 2.4% in Q4 2024.
“Auto financing trends in the fourth quarter underscored just how challenging 2025 was for car shoppers,” said Ivan Drury, Edmunds’ director of insights. “Faced with persistently high vehicle prices and borrowing costs, many consumers were forced to adapt by financing larger amounts, stretching loan terms and, increasingly, taking on four-figure monthly payments. The record-setting figures we’re seeing reflect the financial strain many buyers faced throughout the year.”
For financial institutions, the data underscores a credit environment defined by higher exposures per loan and increased reliance on longer maturities—dynamics that carry implications for portfolio risk, delinquency management, and pricing strategies as 2026 begins.
“Entering 2026, many of the affordability pressures that defined 2025 are still in place, including elevated new-vehicle prices and ongoing economic uncertainty,” Drury said. “That said, there are early signs of rebalancing ahead. New-vehicle prices remain high but are beginning to stabilize, lower interest rates could offer some relief for both new- and used-vehicle shoppers, and an increase in off-lease returns is expected to provide more affordable alternatives in the used market.”
Edmunds said the coming year will test whether easing rates and growing used-vehicle supply can meaningfully improve affordability—or whether lenders and borrowers alike remain locked into record-high payment structures.