Driving the news: According to a report from Edmunds this week, the share of new-car buyers who committed to monthly payments of $1,000 or more in Q2 represented a record-high of 19.8%. By comparison, this figure was 17.8% in the same quarter of last year, and 17.7% in the first quarter of 2025.
For context: Average monthly payments for new-car buyers landed at $756 last quarter, up from $740 last year and from $741 in Q1. Meanwhile, the average down payment on new-vehicle purchases dropped to $6,433 in Q2, down from $6,579 in Q2 2024 and from $6,511 in the previous quarter.
Why it matters: Buyers continue to face significant affordability challenges in the current market. They’re utilizing a range of strategies to manage this, and we’re starting to see some of the effects of financing terms trending upward in recent quarters.
Source: Edmunds
Zooming in: Analysts clarify that the increased monthly payment figures and other upward trends were not due to auto tariff uncertainty, but rather to the recent increase in financing term lengths while vehicle prices stayed the same.
“It would be easy to assume that tariffs are already reshaping the market, but the reality is that the record-breaking trends we saw in the second quarter are reflective of more consumers opting for maxed-out term lengths despite vehicle prices remaining steady,” said Edmunds Director of Insights Ivan Drury.
“It's clear that buyers are pulling the few levers they can control to manage affordability, whether that's by taking on longer loans, financing more, or putting less money down — even if some of those decisions increase their total costs.”
The report noted that more buyers than ever chose extended loan terms of 84 or more months in Q2, a continuing trend from previous quarters. Larger loans are becoming more typical, and 0% financing deals dipped below 1% for the first time ever. At the same time, interest rates remained at record highs, altogether creating a brutal storm for consumers.
What’s next: As we predicted last quarter, longer-term loans remain just a band-aid for the affordability issue, and buyers are still grappling with the best ways to keep their costs down. While tariff consequences weren’t the driving factor for higher monthly payments in Q2, their effects still loom down the road for buyers who are already feeling uncertain.
“Consumers are continuously stretching to afford new vehicles in this market, and while tariffs haven't directly driven these Q2 numbers, they're certainly not going to make things any easier for shoppers moving forward,” Drury added.“
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