Americans owe $1.68 trillion on car loans — more than credit card debt and as much as all federal student loans

Some types of debt seem inescapable. Tens of millions of American are saddled with mortgages, student loans, credit card debt or a combination of the three. But there’s another place where Americans also carry huge outstanding liabilities: in their garages. Cars are rivaling everything else in terms of debt bondage for everyday Americans. Roughly one in four Americans are paying off auto debt, according to a report published Wednesday by the Century Foundation, a progressive think tank, and are overall on the hook for a record $1.68 trillion in car loans or outstanding payments. Those figures out auto loans on par with all outstanding federal student loan debt ($1.69 trillion of federal debt and $1.84 trillion total) and ahead of credit card balances ($1.28 trillion outstanding as of last year). It’s the end result of years of rising prices for cars, an item that has fast outpaced inflation since the pandemic. In a country as car-reliant as the U.S., expensive cars and auto debt have quickly spiraled into one of the largest monthly obligations in household budgets. The average monthly payment on a car is now around $680, according to the report, up almost 40% from 2018, when drivers could expect to pay $506. Some projections have calculated even bigger monthly payments, as much as $760 on average, according to one January estimate from J.D. Power, an industry research firm. The numbers are especially painful for lower-income households who have to spread payments out over longer periods, significantly raising the total cost of a loan. For the average borrower paying off a car loan longer than seven years, their payments add up to nearly 20% of their average monthly income for the lifetime of their loan. “Historically high auto costs and interest rates are pushing record numbers of borrowers into longer term loans that raise the total costs of owning a car and keep households in debt,” the report’s authors wrote. “Paradoxically it is low-income borrowers, with