$1,000+ a Month Car Payments Becoming More Common

Conditions are changing in the new and used car markets, and consumers are responding by taking on more hefty monthly payments, according to a new survey.

The cost of used cars have been down since the pandemic, but now they're back up again, leading some people to new cars that include monthly payments of over $1,000, according to Edmunds.

"It really doesn't make a lot of sense because a car is a depreciating asset, but the price of cars continues to rise," Lone Star College Economics Professor Hank Lewis says, "nowadays it seems like a $25,000 new car has become as rare as a Bigfoot sighting. But part of the problem is people aren't putting in a large down payment."

Another expert says, "People are putting less down It's people financing more and opting for larger payments each month. It would make sense if they were paying $1,000 a month in order to shorten their term."

Weekend radio host of "The Car Pro Show" Jerry Reynolds says high monthly car payments make sense if you're going to pay it off in a couple of years but going high for 60 or 72 months is quite a burden on the pocketbook.

But that's what Professor Lewis says is an overlooked problem: Because vehicles depreciate rather quickly, if a consumer stretches out payments over years, you'll likely owe more on the principal than the car is actually worth after about three years. "It just shows how unaffordable things are."

On top of that, Lewis notes that people now "want to buy the newer vehicles with all the bells and whistles, all the safety features, all the smart car features and everything, and a lot of people aren't buying the 'entry level' cars anymore, and some companies are saying that the profit margins on the starter cars are so low it's not worth building them."

The result then is reduced variety in the car markets, which nudges first time car buyers into higher price brackets.

And "high interest rates are certainly an issue," Reynolds adds, "and a lot of money owe more on their trade-ins than what they're worth, so you put all that together and it's not so hard to understand why 20-percent of people who bought cars in the second quarter of 2025 are paying more than $1,000 a month.

"But surprisingly it has nothing to do with tariffs, we haven't really seen the tariffs affecting prices yet in car markets," says Reynolds, of the Car Pro Show.

"What we're seeing is people being thrust into the new car market suddenly, we're seeing a lot of catastrophic failures of older cars -- the average age of a car today is right about 13 years old -- so you have people whose cars have failed or were in accidents, and they just don't have a down payment but they have to have a car for work."


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