'There's A Bubble': Car Payments Are Hitting Record Highs

This won't be a surprise to anyone whose Instagram Reels algorithm is just those videos of dealership employees rattling off what they drive and what their monthly payment is, but the amount the average person pays to finance a car has never been higher. According to Edmunds, the average monthly payment of newly financed new cars went up to $773 for Q1 2026 whereas a JD Power report has the number pegged at $806. Both sources, meanwhile, say about 20 percent of all new car financing deals had payments exceeding $1,000.

And sadly, the numbers make complete sense when you remember the average transaction price on a new car crossed $50,000 late last year—doing some math ourselves, the monthly payment on a 50-grand, 72-month loan at 7 percent (the most common term and the current average APR for new cars) is $852.45. Edmunds also reports that the average down payment made on a new car fell to an all-time low of $6,206.

This is all before you throw in the fact that the proportion of all used trade-ins carrying negative equity (that's when the car is worth less money than what's owed on it) has grown to an all-time high at about one-third. Negative equity is often "solved" by rolling the outstanding debt into the new loan, making for an even higher payment.

In the cinematic retelling of what happened to the car market post-2020, this is the point where Steve Carell gets on the phone and bluntly tells his associate, "Hey, there's a bubble."

At the end of the day, though, this is a car website not a financial blog, and if spending a grand or so every month for a 2026 model year Whatever XLE Turbo fulfills you emotionally and doesn't hurt anybody else, then more power to you—good credit is temporary, new car smell is forever. But we're also not going to sit here and pretend this will all last without anybody getting burned.

Stay well, drive safe, spend reasonably. Or don't, I'm not your dad.