Car Payments Hit Records — A Growing Pressure Point In Client Budgets

As we talked about a few weeks ago, millions of Americans now carry more credit card debt than emergency savings. Part of that imbalance can be traced back to a simple reality: everything costs more — and cars are near the top of that list.

A $1,000 monthly car payment used to be a rarity, the kind of number you'd only see on a high-end luxury model. Fast-forward to today, and the average new car costs more than $50,000. The payments that once appeared to be outliers are quickly becoming the norm.

According to new data from Edmunds, nearly 20% of new-car buyers are taking on monthly payments exceeding $1,000. To make matters worse, many are making it work by stretching the loan, with more than 22% of borrowers now opting for 84-month terms, a new record high.

Consumers aren't necessarily overspending in a reckless way — they're trying to make a more expensive market fit inside their existing budgets. Bigger vehicles, higher trim levels, and tech-heavy features are pushing prices up, and buyers are using the levers they have to manage the monthly squeeze.

For advisors, this trend is worth paying attention to because vehicle financing tends to fly under the radar. A seven or eight year auto loan doesn't feel like a major long-term financial decision, but it quietly affects a client's cash flow, savings capacity, and flexibility for years.

Younger buyers — especially millennials and Gen Z — often prioritize features, tech, and luxury, even if it means taking on longer loans, while older buyers may be more conservative yet still tempted by high-end SUVs or EVs. These motivations matter, because this isn't just a car story — it's a cash-flow and risk story.

Clients are making borrowing decisions that feel manageable month-to-month, but can create higher costs down the road, such as negative equity traps that spill into other parts of their financial life. To sum up, a $1,000 car payment is no longer an anomaly, and it's a reminder that even everyday purchases can ripple through budgets, emergency savings, and long-term goals.

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