Reports show record-high vehicle financing trends and steady sales in ‘resilient’ market

An Edmunds Q3 2026 report on vehicle buying trends found that new-vehicle buyers borrowed at record levels, took on record-high monthly payments, and financed loans for historic lengths.

The average amount financed climbed to $44,664 in Q3 2026, compared with $44,156 in Q2 2026 and $42,744 in Q3 2025.

More than one in four new-car buyers are now financing their vehicles for 84 months or longer. Loans with terms of 84 months or more accounted for a record 25.5% of financed new-vehicle purchases in Q3 2026, up from 23.9% in Q2 2026 and 21.8% in Q3 2025.

The average monthly payment on financed new-vehicle purchases rose to $787 in Q3 2026, up from $777 in Q2 2026 and $756 in Q3 2025.

“Together, these trends are pushing borrowing costs to new all-time highs,” an Edmunds press release states. “The average total interest paid over the life of a financed new-vehicle purchase climbed to a record $9,938 in Q3 2026, up from $9,811 in Q2 2026 and $9,442 a year ago.”

The increase came even as the average APR for new-vehicle purchases held steady at 7% in Q3 2026, the same as in Q2 2026 and Q3 2025.

The share of new-car buyers taking on monthly payments of $1,000 or more reached a record 21.2% of financed purchases in Q3 2026, up from 20.3% in Q2 2026 and 19.1% in Q3 2025. Six-and-a-half percent of used-vehicle buyers took on $1,000-plus monthly payments, which was also an all-time high, up from 6.3% in Q2 2026 and 6.1% in Q3 2025.

Source: Edmunds

“What we’re seeing in the data is a remarkable display of consumer resilience against a very stretched financing landscape,” said Jessica Caldwell, Edmunds’ head of insights, in the release. “Even as monthly payments hit record highs, loan terms stretch to historic lengths, and four-figure monthly payments become more common, buyer demand for new vehicles hasn’t dropped off. Instead of sitting on the sidelines, consumers are adapting: They’re allocating more of their household budgets to their vehicles, stretching out their loan terms, and becoming more proactive about shopping around for financing to find ways to make the numbers work.”

Edmunds analysts note that this stretching is particularly apparent among buyers taking on the highest monthly payments. In Q3, 69% of new-car buyers with monthly payments of $1,000 or more chose loan terms of 72 months or longer.

“For some shoppers, a longer loan term may be the only way to get the vehicle they need, but it’s important to understand the trade-off,” said Ivan Drury, Edmunds’ director of insights, in the release. “Stretching out a loan shouldn’t be a way to talk yourself into a vehicle that doesn’t make sense for your budget when you look at the total cost. When buyers are already financing nearly $45,000 and taking on another nearly $10,000 in interest, it’s critical to think beyond whether the monthly payment works today and consider what you’re committing to over the full life of the loan.”

Edmunds noted that affordability pressures reflected in its Q3 auto finance data come amid newly announced changes to federal fuel economy requirements, stating they aren’t necessarily a good thing for vehicle buyers.

“Any potential relief is welcome in an affordability environment like this, but changes to fuel economy requirements don’t necessarily translate into lower prices on dealer lots,” said Caldwell. “Automakers continue to navigate significant cost pressures, and there’s still a substantial gap between where vehicle prices are today and what many households can comfortably afford.”

U.S. Department of Transportation (USDOT) Secretary Sean P. Duffy released the final rule Sept. 28 to reset the National Highway Traffic Safety Administration (NHTSA)’s corporate average fuel economy (CAFE) standards for model years 2022-2031.

Calling the final rule initiative “Freedom Means Affordable Cars,” USDOT says it will:

• • “Give automakers the flexibility to manufacture cars the public wants to buy;
  • “Reduce the average cost of a new vehicle by $1,300 for American families;
  • “Save the American people $138 billion over the next five years; and
  • “Prevent more than 300,000 serious injuries and save 1,900 lives by encouraging new car sales.”

According to NHTSA Administrator Jonathan Morrison, the rule “restores integrity to the national fuel economy program, balancing vehicle affordability and energy conservation goals while improving safety on our roadways.”

Near the end of September, Cox Automotive raised its full-year new-vehicle sales forecast and expected September sales to be up 6.5% year-over-year, a decline of 2.7% from August. However, the report notes that seasonal factors make month-to-month comparisons challenging.

Charlie Chesbrough, Cox Automotive’s senior economist, said September new-vehicle sales should stay on the path the market has been on since March — a low-mid 16 million pace.

“Strong fleet sales, wealthier vehicle buyers, and more access to credit are all keeping this market relatively strong in the face of many headwinds,” he said in a press release. “High inflation and historically low consumer confidence have not discouraged buyers as much as might be expected. New-vehicle buyers today are more affluent, so they may not be as impacted by inflationary pressures as other consumers.”

Cox Automotive raised its full-year 2026 new-vehicle sales forecast to 16.1 million units from 15.8 million, “reflecting a market that has proven more resilient than expected despite higher fuel prices, elevated interest rates, and ongoing economic uncertainty,” the release states. It adds that strong summer sales performance, improving credit availability, and sustained consumer demand prompted the upward revision.

In the used-vehicle market, Cox Automotive expects 20.5 million used retail sales and 38.5 million total used-vehicle sales this year, while pre-owned sales are forecast at 2.6 million units. Cox increased the 2026 forecast for retail sales and total sales, but total used-vehicle sales in 2026 are still forecast to finish slightly below 2025 levels.

“While affordability challenges remain and the industry is still adjusting to the loss of federal EV incentives, vehicle demand has proven remarkably durable heading into the fourth quarter,” said Jeremy Robb, Cox Automotive’s chief economist, in the release.

On Oct. 7, Cox Automotive reported that its Manheim Used Vehicle Value Index was 205.9 in September, down 0.6% from a year ago and 1.1% from August after adjustments for mix, mileage, and seasonality.

“The September results capped a quarter in which depreciation accelerated amid higher fuel costs, rising interest rates, and broader economic pressure,” a press release states. “Despite resilient demand for used vehicles, Cox Automotive lowered its year-end outlook and now expects the Manheim Used Vehicle Value Index to finish 2026 up approximately 0.2% year over year, down from the 2% increase forecast in July.”

Robb noted in the release that by the end of September, vehicle depreciation was steeper than typically seen at that time of year.

“[W]ith the conflict in the Middle East ongoing, diesel prices at record highs, and interest rates climbing rapidly, increasingly worrying both businesses and consumers, wholesale prices have felt the sting,” he said.

Meanwhile, wholesale EV sales at Manheim were up 22% from Q2 and 45% from a year ago. EVs reached a record-high 4.9% of all Manheim transactions in Q3, up from 3.9% in Q2.

Used retail EV sales reached 124,000 in Q3 — the highest level on record, up 11.4% year over year; however, Cox Automotive says that’s still only about 2.8% of all used retail sales.

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Featured image credit: Fahroni/iStock

Charts provided by Edmunds and Cox Automotive