More than 1 in 5 car loans stretch 7 years or longer as shoppers are taking on larger loans than ever before with less money down
Santa Monica, Calif.—New-vehicle financing trends in Q3 2025 continue to underscore the affordability challenges facing car shoppers, according to the latest analysis from Edmunds.
Edmunds’ Q3 2025 data on financed vehicle purchases shows:
- Down payments drop to the lowest level in nearly four years. The average down payment for new-car purchases dropped to $6,020, the lowest level since Q4 2021. This compares to $6,433 in Q2 2025 and $6,619 in Q3 2024.
- $1,000-plus monthly payments remain persistently high. The share of buyers committing to monthly payments of $1,000 or more accounted for 19.1% of all financed new-car transactions in Q3, near the record set last quarter at 19.3%. For used vehicles, $1,000-plus monthly payments hit a record high of 6.1%, up from 5.6% in Q2.
- More than 1 in 5 car loans stretch 7 years or longer. Edmunds analysts report that 84-month or longer loans made up 22% of financed new-car purchases in Q3, slightly down from 22.4% last quarter and 18.5% in Q3 2024.
- Shoppers are taking on larger loans than ever before. The average amount financed for new vehicle purchases rose to $42,647 in Q3, up from $42,388 in Q2 2025 and $40,713 in Q3 2024.
- High interest rates remain the norm. The average annual percentage rate (APR) for new vehicle purchases held at 7% in Q3 — marking the third straight quarter this figure was at or above 7%. Edmunds analysts state that promotional financing was limited in Q3: Just 3.4% of loans carried a 0% rate while 18.3% of loans carried rates below 4%. By contrast, 71.6% of loans carried an APR of 5% or higher, and 13.8% were at an APR of 10% or higher. Edmunds analysts note that the Fed’s late September rate cut came at the end of the quarter and thus did not have a significant effect in Q3.
“In Q3, affordability in the new-car market remained stretched, with buyers putting less money down, financing more and relying on longer terms to keep monthly costs in check,” said Jessica Caldwell, Edmunds’ head of insights. “But compared to the near-new market, where inventory has been constrained by lean pandemic-era sales and reduced leasing activity, new vehicles seem to have emerged as the more compelling option.
“With the potential for lower APRs and tariff-related price increases yet to materialize in any meaningful way, shopping for a new vehicle may have felt like the smarter play in Q3 — and could have given the new car market a modest boost.”
Edmunds analysts note that the model year sell-down is well underway, with 2026MY vehicles accounting for roughly 38% of on-lot inventory at the end of Q3.
However, average interest rates and discounts between incoming and outgoing model years were similar: the average APR was 6.9% for 2025MY compared to 7.1% for 2026MY, and the average discount from MSRP was $2,119 for 2025MY compared to $1,431 for 2026MY.
Quarterly New-Car Finance Data (Averages)
| 2025 Q3 | 2024 Q3 | 2025 Q2 | |
| Term (Months) | 70.1 | 68.8 | 69.8 |
| Monthly Payment | $754 | $736 | $756 |
| Amount Financed | $42,647 | $40,713 | $42,388 |
| APR (%) | 7.0 | 7.1 | 7.2 |
| Down Payment | $6,020 | $6,619 | $6,433 |
Quarterly Used-Car Finance Data (Averages)
| 2025 Q3 | 2024 Q3 | 2025 Q2 | |
| Term (Months) | 69.9 | 69.5 | 69.7 |
| Monthly Payment | $565 | $548 | $559 |
| Amount Financed | $29,530 | $28,097 | $29,080 |
| APR (%) | 10.8 | 11.3 | 10.9 |
| Down Payment | $3,976 | $4,165 | $4,092 |
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