If America's Total Auto Loan Debt Was Split Equally, How Much Would You Owe?
Americans love our cars, and we put our money where our (motor)mouth is.
In the second quarter of 2026, the Federal Reserve reported that total automotive debt reached $1.713 trillion. That’s an all-time high, up $28 billion from the first quarter and up $58 billion year-over-year. Meanwhile, nearly 8 in 10 Americans now report financial stress according to a Capital One survey. So how can you avoid the risks that come with growing auto loan debt?
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America’s Auto Debt Split Equally
According to the Census Bureau, there are around 270.6 million adults in the US. If you divide the $1.713 trillion in auto debt by 270.6 million adults, that comes to around $6,330 per adult.
That doesn’t sound so high, right?
Unfortunately, the real picture of car loan debt in America is far more daunting.
Auto Loans in the US
In the second quarter of 2026, the average loan for a new car reached an all-time high of $43,610 according to Experian, up $1,715 from a year earlier. That pushed the average monthly payment up to $765.
For used cars, the average loan clocked in at $27,852, with a monthly payment of $542.
One sneaky way that carmakers have been able to drive prices higher is by offering longer loan terms.
“Extending a loan over six or seven years can make a more expensive vehicle appear affordable month to month, but it also increases the total financing cost and can leave the buyer owing more than the vehicle is worth for a longer period of time," said Devin Daly of automotive AI company Impel.
And make no mistake: cars have gotten more expensive. From early 2025 to early 2026 alone, Kelley Blue Book reports that tariffs and inflation drove new car prices up 10.4% in the US.
How To Trim Your Own Car Debt
First, watch out for car loans longer than five years.
“A $44,000 loan at 7% costs nearly $12,000 in interest over a seven-year loan, versus about $8,000 over a five-year loan," said Simon Goodall of auto refinance company Caribou.
Cars are depreciating assets after all, and some financial experts recommend even shorter car loans. Consumer analyst Elisabella Ricca of TopCashBack recommends the 20/3/8 rule: “Pay at least 20% down, pay off the loan in three years or less and keep your total car payments below 8% of your gross income.”
Just as you shop around for cars to compare pricing and find the right fit, do the same with your financing. Don’t assume that dealer financing or your own bank will offer you the best loan terms.
When you do finally pay off your car loan, don’t take your foot off the gas of boosting your net worth. “Keep making the same monthly payment, but to yourself!" said financial planner Steven Rogé of R.W. Rogé & Company. “Put that money toward your emergency fund, retirement or even your next car purchase.”
America has become an expensive place to live. The better you can insulate yourself from future expenses like debt payments, the more likely you are to pull ahead in the increasingly difficult rat race.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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