New Edmunds Data Exposes Bitter Reality of New Car Affordability

More buyers are paying $1K+ on monthly payments than ever before, says Edmunds

According to new data highlighting significant trends in new-car financing from the car-buying authorities at Edmunds, American buyers are shelling out more each month to finance their new set of wheels.

The car-buying experts reported that new-car buyers who committed to monthly payments of $1,000 or more reached a record high during Q4 2025, comprising a whopping 20.3% of all financed new-vehicle purchases during the quarter, up from 19.1% in Q3 2025 and 18.9% in Q4 2024.

On average, Edmunds found that the actual monthly payments buyers are making on their financed new-vehicle purchases are significantly lower. However, they are at the highest levels they have ever recorded; at $772 in Q4 2025, an incremental increase from $754 in Q3 2025 and $754 in Q4 2024.

High vehicle MSRPs and interest rates are influencing these trends

Directly influencing these trends is the high price of new vehicles. According to the latest figures from Cox Automotive and Kelley Blue Book, the average transaction price (ATP) of a new car in the U.S. hovered at $$49,814in November, a figure reflecting a 1.3% year-over-year increase and heavily influenced by buying patterns “from affluent households.”

The average loan amount written rose to a record high of $43,759 in Q4 2025, up significantly from $42,647 in the previous quarter and $42,113 in the same quarter last year (Q4 2025). To make matters worse, a high APR likely accompanies these loans, as the average percentage dipped slightly to 6.7% in Q4 2025, down from 7% in Q3 2025 and 6.8% in Q4 2024; still near historically high levels.

Edmunds analysts state that Q4 2025 wasn’t friendly to buyers in terms of automakers offering promotional sales rates. Just 3.1% of new-vehicle loans were signed at the coveted 0% rate, which is down from 3.3% in Q3 2025 but up slightly from 2.4% during the same quarter the previous year. In addition, they also report that 84-month or longer loans made up 20.8% of financed new-car purchases, slightly down from 22% in Q3 2025. Edmunds analysts note that while it is above the 17.9% share seen in Q4 2024, it underscores consumers’ continued reliance on extended loan terms as an affordability tool.

In a statement, Ivan Drury, Edmunds’ director of insights, noted that these figures “underscored just how challenging 2025 was for car shoppers,” as they navigated a complex landscape of affordability challenges, including high MSRPs and interest rates. Furthermore, Drury says that these behaviors, where buyers finance more expensive vehicles over more extended periods with four-figure monthly payments, “reflect the financial strain many buyers faced throughout the year.” Drury states that these could have a dramatic influence on the auto market going into 2026.

“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.

Average Quarterly New-Car Finance Data (Edmunds)

Final thoughts

Edmunds experts also observed that used-car buyers aren’t exempt from this phenomenon, as those who committed to $ 1,000 or more in monthly payments also reached a new record during Q4 2025. They state that 6.3% of used-car buyers took on these massive monthly payments, up slightly from 6.1% during the previous quarter (Q3 2025) and 5.4% during the same quarter during the previous year (Q4 2024).

Although these conditions are exacerbated by ballooning new-car MSRPs and average transaction prices, Ivan Drury believes that “there are early signs of rebalancing ahead” of the new year, which could translate to positive signs for car buyers of all stripes.

“[…] 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.”