New-vehicle financing hits new highs as affordability pressures persist

Consumers take on larger loans and longer terms while reducing down payments to manage rising monthly costs.

On the Dash:

• Record loan amounts and payments signal continued affordability pressure across new-vehicle buyers.
• Longer loan terms and lower down payments are becoming primary tools to close deals.
• Improvements in the used-vehicle supply may create new sales opportunities as buyers seek alternatives.

New-vehicle financing reached new highs in Q1 2026 as consumers continued to take on larger loans and restructure deals to maintain affordability, according to Edmunds.

The average amount financed for new vehicles climbed to a record $43,899 in Q1 2026, up from $43,759 in Q4 2025 and $41,473 in Q1 2025. Monthly payments also reached a new peak, rising to $773, compared to $772 in the previous quarter and $741 a year earlier.

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Higher-cost financing remains widespread as Edmunds data indicates 20% of new-vehicle buyers committed to monthly payments of $1,000 or more in Q1 2026, nearly unchanged from 20.3% in Q4 2025 but up from 17.7% a year earlier. Among used-vehicle buyers, 5.3% took on $1,000-plus payments, down from 6.3% in Q4 2025 but higher than 4.9% in Q1 2025.

At the same time, buyers are adjusting deal structures to offset rising costs. The average down payment for new vehicles fell to $6,206, down from $6,228 in Q4 2025 and $6,511 a year ago. Longer loan terms are also becoming more common, with 84-month or longer loans accounting for 22.9% of new-vehicle financing, up from 20.8% in Q4 2025 and 21.2% in Q1 2025.

Interest rates remain high, with the average APR for new vehicles at 6.9% in Q1 2026, compared to 6.7% in Q4 2025 and 7.1% a year earlier. Promotional 0% financing was limited, accounting for 2.6% of loans, down from 3.1% in Q4 2025 but higher than 1% in Q1 2025.

Edmunds analysts say consumers are increasingly balancing upfront costs and long-term risk. While smaller down payments and longer terms can reduce monthly payments, they often increase total loan costs. Analysts also noted that improving used-vehicle inventory could give cost-conscious buyers greater flexibility in the months ahead.