Auto affordability and loan length
New-car prices are approaching $50,000 on average and lenders are seeing longer loan terms and rising negative equity at trade-in, raising durability concerns for auto portfolios. Consumer pieces noted the $50K threshold while social industry signals reported growing use of 72–84 month terms and rising negative-equity shares in recent cohorts. (vindy.com) (x.com)
The average new vehicle sold in the U.S. went for $49,275 in March, and buyers are stretching loans longer to keep payments workable. (coxautoinc.com) Kelley Blue Book said March prices were up 3.5% from a year earlier, while the average sticker price stayed above $50,000 for a 12th straight month at $51,456. Incentives rose to 7.2% of transaction prices, but the mix shifted toward pricier pickups and sport utility vehicles. (coxautoinc.com) Edmunds said the average amount financed on a new vehicle hit a record $43,899 in the first quarter of 2026, and the average monthly payment rose to $773. One in five financed new-car purchases carried a payment of at least $1,000 a month. (edmunds.com) Buyers are also using longer contracts more often. Edmunds said 84-month-or-longer loans made up 22.9% of financed new-car purchases in Q1 2026, up from 20.8% in Q4 2025 and 21.2% a year earlier. (edmunds.com) A longer loan lowers the monthly bill by spreading the same debt over more months, but it also slows how fast the balance falls. That leaves more owners at risk of owing more than the car is worth when they try to trade it in. (edmunds.com) Edmunds said 28.1% of trade-ins toward new-car purchases had negative equity in Q3 2025, up from 26.6% in Q2 2025 and 24.2% in Q1 2025. The average amount owed on those upside-down loans reached a record $6,905. (edmunds.com) The debt gets heavier at the sharp end of the market. Edmunds said 24.7% of negative-equity trade-ins carried more than $10,000 in debt in Q3 2025, and buyers who rolled that debt into a new loan paid an average $907 a month. (edmunds.com) Lenders are watching the same squeeze. Experian said subprime borrowers accounted for 15.31% of total vehicle financing in Q4 2025, up from 14.54% a year earlier, while the average new-vehicle loan amount reached $43,582 and the average monthly payment rose to $767. (experian.com) Experian said lenders are focusing more on “payment flexibility” and on how long-term borrowers are performing. Edmunds’ Jessica Caldwell said buyers are “getting creative” to keep purchases within reach as prices and payments stay near record levels. (experian.com) (edmunds.com) The result is a market where the monthly payment, not the vehicle price, is steering more deals. As long as new-car prices hover near $50,000, the pressure to lengthen loans and carry debt forward is likely to stay in the numbers. (coxautoinc.com) (edmunds.com)
