“Unfortunately, the Trump administration’s reckless actions on the economy and the costly fallout from the war in Iran have made it difficult for working families to afford a car and left millions more with a huge pain in their pockets,” Michelinini said. “For millions of working families, a car is not a luxury, but an essential economic lifeline. Working families deserve relief and they deserve to have a government watching over them, not allowing lenders and car dealers to make record profits at their expense.”
“In recent years, auto debt totaled $1.68 trillion, a 37% jump since early 2018, and now constitutes the largest volume of outstanding loan debt ever recorded,” Michelinini’s team found. At the end of 2025, nearly 86 million Americans — about 28% of consumers — have outstanding auto loan or lease debt. And residents of states where driving is more necessary, such as Texas, Alaska, Louisiana, and Florida, are struggling with Highest levels of auto debt.”
“Borrowers with auto loans experience significantly higher and faster credit card balance growth — regardless of income level — suggesting that auto debt is trickling down to broader financial stress,” according to the report. Specifically, “Between early 2018 and late 2025, credit card balances for middle-income borrowers with auto debt rose 31%, while those without auto loans saw significantly lower growth of 17%. Borrowers with long-term auto loans carry monthly balances on their credit cards that are 190% of (i.e., nearly double) their monthly income.”
“At the end of 2025, the average auto loan origination balance reached $33,519, $10,000 higher than the average in 2018, due to dramatic price increases for even basic cars and a shortage of ‘affordable’ car models,” the post explains. “Borrowers also face higher interest rates. Today, the average annual percentage rate (APR) for auto loans is around 10%, compared to 7.5% in 2018.”
Financially vulnerable borrowers are particularly affected by current conditions. The researchers found that for those with very limited access to credit, “the average APR is 18.7%, meaning that a six-year loan on a $30,000 car would cost just $20,000 in interest. Furthermore, Black, Latino, American Indian, and Alaska Native borrowers face higher interest rates than their white and Asian counterparts.”
It’s also hard to find affordable vehicles these days. Sean Tucker, managing editor at Kelley Blue Book, He said CNBC said that “in 2017, [automakers] 36 models built for $25,000 or less…today? four.”
Tucker said a “record” share of new cars — more than 43% — are now purchased by households with incomes of at least $150,000. According to him, “Automakers serve this market.”
“For the overwhelming majority of working families, a car is a necessity — but buying a car has become a financial trap, eating up more people’s paychecks than ever before,” stressed Angela Hanks, another author of the report and head of policy programs at the Century Foundation.
With many American communities Lacking High-quality public transportation Some American families who need a car turn to loans with longer terms. “For these borrowers, even after taking out these riskier products with additional lifetime costs, car loan payments still amount to approximately 20% of their monthly income, meaning that approximately $1 out of every $5 they earn will go toward car payments over the seven years of their loan,” the report notes.
“While families are drowning” in costly, long-term loans, “the Trump administration is returning money to big corporations for the tariffs consumers paid, with interest,” Hanks stressed.
The Trump administration last month launched a portal designed to facilitate refunds for about $166 billion in tariffs that the U.S. Supreme Court struck down as unconstitutional, but only companies that directly paid import taxes are eligible, though the companies have largely passed on higher costs to consumers.
Meanwhile, the President responded to the Supreme Court’s decision with duty Temporary import taxes and its administration follows up.”Plan B“Hearings are required to impose the tariffs under Section 301 of the Trade Act of 1974, a different statutory authority than the one Trump used last year.
The new report concludes with a call to action for US policymakers: “In the midst of a growing affordability crisis, Americans deserve urgent action to cut costs and rein in the profiteering of merchants and lenders who have allowed working families to get away with it for too long.”
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