Car ownership in the U.S. has become more expensive than ever, with over 275 million vehicles currently on the road. Various factors, including the Covid-19 pandemic, ongoing supply chain disruptions, inflation, and the Federal Reserve’s interest rate hikes, have contributed to this rising cost. The purchase of a car is often the second-largest financial decision most people make, next to buying a home. As a result, financing has become a necessity for many consumers looking to buy new or used cars, leading to a significant rise in auto loan debt.
Record-Breaking Auto Loan Debt
Currently, over 100 million Americans hold car loans, and the total auto loan debt in the U.S. has reached a record $1.5 trillion. In 2023, the average monthly payment for a new car loan is $725, a substantial increase from $650 in 2022. For used vehicles, the average monthly payment is $516, reflecting a slight increase from the previous year. While loan origination volumes have slightly decreased, the amounts borrowed have grown, indicating that consumers are taking out larger loans to afford vehicles, further increasing the total debt burden.
![The Growing Burden of Auto Loan Debt in 2025 and Negative Car Buying Experiences in the U.S. The Growing Burden of Auto Loan Debt in 2025 and Negative Car Buying Experiences in the U.S.](https://daxstreet.com/wp-content/uploads/2025/02/The-Growing-Burden-of-Auto-Loan-Debt-in-2025-and-Negative-Car-Buying-Experiences-in-the-U.S.jpg)
Auto loan terms and interest rates depend heavily on factors such as the borrower’s credit score and financial profile. Lenders evaluate borrowers’ income, expenses, assets, and liabilities to determine the terms of the loan. A higher credit score generally leads to better loan terms. For instance, Toyota Financial Services mainly serves consumers with high credit scores, averaging 744, while other lenders, such as Chase Auto, extend loans to individuals with lower credit scores, typically offering terms for those with scores starting at 620.
Negative Car Buying Experiences for Consumers
Despite the growing number of people relying on loans to purchase cars, many consumers report negative experiences when dealing with auto loans. Some individuals have felt rushed during the purchasing process, with a focus on closing the deal quickly rather than ensuring the buyer’s needs are met. One such consumer, Sean Miller, shared that his car loan from 2019 has resulted in ongoing financial strain. The vehicle, which he no longer needs, has caused him to face significant financial losses if he attempts to sell it, hindering his ability to save for other life goals, like starting a family.
Moreover, the auto loan industry has seen increasing complaints and lawsuits from consumers who claim they have been subjected to discriminatory or illegal lending practices. These concerns highlight the need for increased awareness and caution when entering into auto loans. Consumers must stay informed about their financial options, and lenders need to ensure they provide transparent, fair practices to avoid exacerbating financial difficulties for borrowers. As car prices continue to rise, it is essential for individuals to approach the auto loan process with caution and careful consideration of their long-term financial health.