Car payments squeeze Americans as auto debt hits $1.68 trillion, report finds

Auto debt is becoming a bigger problem for consumers, a new report shows.

Total auto debt reached $1.68 trillion at the end of 2025 — a 37% increase since late 2018, when the debt was at $1.23 trillion, according to a new analysis by The Century Foundation, a left-leaning think tank, and Protect Borrowers, a consumer advocacy group, provided exclusively to CNBC. That figure includes traditional installment loans and leases.

Nearly 86 million Americans — about 1 in 4 — carry outstanding auto loan or lease debt, the organizations calculated.

The average origination balance for an auto loan was $33,519 at the end of 2025, compared with $24,782 in the fourth quarter of 2018, the research shows. Over that same period, the typical monthly auto loan payment increased to more than $680 from $506.

“People are seeing more and more of their paychecks eaten by their car payments,” said Angela Hanks, chief of policy programs at The Century Foundation.

The surge in auto debt comes as Americans face more expensive vehicles and higher interest rates, a combination that can force them to choose between higher monthly payments and longer repayment terms.

Ownership costs can present additional affordability challenges. Gas prices have increased due to the Iran war, with a nationwide average price per gallon of $4.53 as of Wednesday, according to AAA.

‘Virtually no new vehicles for sale under $20,000’

Rising car prices have led many families to take on more debt to get behind the wheel. The average transaction price for a new vehicle is nearly $49,000, compared to between $35,000 and $37,000 in 2018, according to Edmunds.

“That’s a $12,000 to $14,000 move in less than a decade, and incomes haven’t kept pace,” said Ivan Drury, director of insights at Edmunds.

At the same time, the supply of affordable cars has largely dried up, Drury said.

“There are virtually no new vehicles for sale under $20,000,” Drury said. “Buyers who used to have options at the bottom of the market no longer do.”