Most recent data shows that 92% of households in America have at least one car; [1] but how many of them are living beyond their means?
Research shows that the average monthly payments for a new car are currently as high as $748 and overall loan amounts are reaching as high as $42,332 across a 69 month term for a new car. [2] With national disposable income averaging $50,087 in 2024, [3] [4] rising vehicle prices and borrowing costs are placing increasing pressure on household finances. As inflation continues to grow, questions remain over whether disposable income can keep pace with the affordability of both new and used vehicles.
Our latest in-depth data analysis compares the average outstanding auto loan debt held per person in each state according to the latest available data, the interest acquired for those loans and the percentage of missed car loan payments and compares it to average yearly disposable income to understand which U.S. states are overextending its finances to stay on the road.
Alongside this, we’ve also highlighted savvy tips to think about before taking on car finance, along with practical ways to steer clear of missed payments should you choose to borrow.
Key Findings
- The average American with an auto loan spends $5,680 a year plus $517 on interest, equal to 12.4% of disposable income. That’s nearly the same share U.S. households spend on food each year.
- Car debt has ballooned over two decades. National auto loan debt per capita has jumped 92% since 2003, from $2,960 to $5,680, outpacing inflation over the same period.
- Households in New Mexico (17.3%), Mississippi (16.6%), and Louisiana (16.4%) spend the largest share of income on car loans across all states.
- Borrowers in Mississippi had the highest delinquency rate in Q4 2024, with 7.1% missing auto loan payments.
- Massachusetts (7.9%) and Washington (8.4%) spend the least share of disposable income on car payments, thanks to higher average incomes.
- States in the South and Southwest show some of the weakest income-to-debt ratios (5.8–6.6), suggesting residents are particularly vulnerable to financial curveballs.
What is an auto loan?
To keep up with the rising costs, America has resorted to relying more and more on financing options. [5] This is where auto loans come in. An auto loan, or car loan, is a personal loan an individual can take out to finance the purchase of their vehicle instead of paying for it all at once, with added interest on top. In these cases, the car itself is the collateral for the loan, meaning if you can’t keep up with payments the lender can repossess it.
Typically, auto loans range from 36-72 month terms. Depending on the length of term chosen will affect the loan interest rate and payment amount.
However, loan terms will depend upon your personal financial situation including your credit score and income.
US Car Loan Debt Crisis
The country’s car finance debt as a whole has incrementally increased by 92% in the last twenty years from $2,960 per capita in 2003 to $5,680 in 2024 [6]. This is no surprise as the cost of new vehicles has taken a very similar trajectory. According to the Consumer Price Index, the Bureau of Labor Statistics measurement of inflation and prices paid by consumers, new vehicle prices have risen substantially in this same time period. The sharpest increases occurred during the Covid-19 pandemic and subsequent supply chain crisis in 2021-2022, when annual price growth for new vehicles reached double digits. [7]
Average auto debt loans across the U.S.
| 2024 Q4 auto loan amount (Yearly) | % of people with missed payments | Interest rate % | Estimated yearly interest | Yearly disposable income | % of disposable income every year | Total payments over term (68 months) | Income to debt ratio | |
| Nationwide | $5,680 | 4.80% | 9.10% | $517 | $50,087 | 12.4% | $35,087 | 8.1 |
Across the country, car payments have shifted from a manageable expense to one of the biggest outgoings on household budgets. Our data shows that the average American with an auto loan spends about $5,680 a year, just on their vehicle, plus $517 on interest. This translates to 12.4% of average disposable income. Compare this with a U.S consumer spending an average of 10.6% of their disposable income on food in 2024. [8] In other words, the typical car loan is now eating up a bigger slice of the household budget than groceries.
In our analysis, the income-to-debt ratio shows how many dollars of disposable income households have for every dollar of car loan debt. A lower number means people are stretched thinner. For America as a whole, the income-to-debt ratio is 8.1. While this is still healthier than some individual states, it still shows many households are carrying more financial strain to pay for their car.
Which states are feeling the strain of auto loan debt the most?
| State | 2024 Q4 Auto Loan (Yearly) | % of people with Missed payments | Interest rate % | Estimated yearly interest | Yearly disposable income | % of disposable income every year | Total payments over term (68 months) | Income to debt ratio |
| New Mexico | $6,780 | 5.50% | 9.49% | $643 | $43,024 | 17.3% | $42,032 | 5.8 |
| Mississippi | $6,470 | 7.12% | 10.59% | $685 | $43,072 | 16.6% | $40,513 | 6.0 |
| Louisiana | $6,890 | 6.28% | 10.18% | $701 | $46,335 | 16.4% | $42,983 | 6.1 |
| Texas | $7,920 | 2.50% | 9.68% | $767 | $55,374 | 15.7% | $49,185 | 6.4 |
| Arkansas | $6,330 | 5.29% | 9.49% | $601 | $44,868 | 15.4% | $39,242 | 6.5 |
| West Virginia | $6,320 | 4.77% | 8.95% | $565 | $45,726 | 15.1% | $38,985 | 6.6 |
| Georgia | $6,530 | 6.76% | 10.46% | $683 | $48,926 | 14.7% | $40,841 | 6.8 |
| Oklahoma | $6,270 | 4.83% | 9.29% | $582 | $46,516 | 14.7% | $38,798 | 6.8 |
| Alabama | $6,220 | 6.48% | 10.19% | $634 | $46,773 | 14.7% | $38,807 | 6.8 |
| South Carolina | $5,930 | 5.89% | 10.01% | $594 | $45,093 | 14.5% | $36,937 | 6.9 |
Some states are in an even worse position than the U.S. average when it comes to car financing. In many regions, especially across the South and Southwest, households are spending 15-17% of their yearly disposable income on car payments.
New Mexico sits at the top of this list, with residents spending 17.3% of yearly disposable income on car loans. That means nearly one out of every six of their take-home dollars goes directly to financing their vehicle. With average yearly payments of $7,423 with interest, New Mexico’s car debt is almost 20% (19.8%) above the overall average yearly payments of $6,197.
Mississippi is close behind. Households spend 16.6% of their disposable income on auto loans, while also facing the highest rate of missed payments at 7.12%, suggesting borrowers here really cannot afford the loans they’ve taken out. High costs and high missed payment rates make Mississippi one of the most precarious states for car finance.
Louisiana also faces severe strain. Residents spend 16.4% of their disposable income on car payments, with average interest rates sitting at 10.18%, showing they’re spending much more than the vehicle’s outright cost, too.
Other states such as Arkansas (15.4%), West Virginia (15.1%), and Georgia (14.7%) also exceed the national average by a wide margin, showing how deeply the crisis has taken hold in the South.
The states spending the lowest share of disposable income on car payments
| Rank | State | 2024 Q4 Auto Loan (Yearly) | % of people with missed payments | Interest rate % | Estimated yearly interest | Yearly disposable income | % of disposable income every year | Total payments over term (68 months) | Income to debt ratio |
| 1 | Massachusetts | $4,290 | 2.54% | 7.80% | $334 | $58,602 | 7.9% | $26,184 | 12.7 |
| 2 | Washington | $4,930 | 3.09% | 7.93% | $391 | $63,143 | 8.4% | $30,126 | 11.9 |
| 3 | Hawaii | $4,090 | 3.24% | 9.69% | $396 | $51,354 | 8.7% | $25,401 | 11.4 |
| 4 | Connecticut | $4,520 | 3.04% | 8.06% | $364 | $54,371 | 9.0% | $27,655 | 11.1 |
| 5 | New York | $4,460 | 3.91% | 8.24% | $367 | $52,423 | 9.2% | $27,332 | 10.9 |
| 6 | Oregon | $4,270 | 3.23% | 7.57% | $323 | $49,511 | 9.3% | $26,006 | 10.8 |
| 7 | Minnesota | $4,690 | 2.77% | 7.28% | $341 | $53,113 | 9.5% | $28,488 | 10.6 |
| 8 | Rhode Island | $4,820 | 2.84% | 7.94% | $383 | $51,385 | 10.1% | $29,458 | 9.9 |
| =9 | New Jersey | $5,090 | 3.76% | 7.83% | $398 | $53,866 | 10.2% | $31,075 | 9.8 |
| =9 | Wisconsin | $4,570 | 3.51% | 7.95% | $363 | $48,181 | 10.2% | $27,932 | 9.8 |
However, it’s not all doom and gloom. In some states, high incomes or lower loan sizes mean that car payments take up a smaller share of household budgets, making vehicle costs much more sustainable.
In Massachusetts, car payments account for only 7.9% of disposable income, one of the lowest ratios nationwide. Stronger average incomes help keep payments manageable, even with relatively high yearly payments of $4,624 with interest. Similarly, Washington (8.4%) and Connecticut (9%) show how wealthier states keep car debt in check relative to their income.
Which states have the largest yearly auto loan costs?
| Rank | State | 2024 Q4 auto loan (yearly) | Estimated yearly interest | Total auto loan + interest |
| 1 | Texas | $7,920 | $767 | $8,687 |
| 2 | Louisiana | $6,890 | $701 | $7,591 |
| 3 | New Mexico | $6,780 | $643 | $7,423 |
| 4 | Georgia | $6,530 | $683 | $7,213 |
| 5 | Florida | $6,560 | $618 | $7,178 |
| 6 | North Dakota | $6,630 | $538 | $7,168 |
| 7 | Mississippi | $6,470 | $685 | $7,155 |
| 8 | Arkansas | $6,330 | $601 | $6,931 |
| 9 | West Virginia | $6,320 | $565 | $6,885 |
| 10 | Alabama | $6,220 | $634 | $6,854 |
Beyond those that have stretched their personal incomes, there are also those states that are hit with the largest debt payments overall for their vehicles. Our figures show that some people are paying over $8,000 a year to finance their vehicles.
It’s Texas that has the highest yearly auto loan costs in the country at $8,687, roughly $720 a month with interest just on owning a vehicle. It’s $4,201 more than the lowest-paying state, Hawaii. Even with relatively higher incomes, Texans are still spending 15.7% of their disposable income, pushing them into unsustainable territory.
Louisiana also follows closely behind with $7,591 a year including interest. That’s equal to ~$630 per month. Despite lower disposable incomes compared to Texas, the raw cost of loans remains steep, making it harder for households to keep up.
New Mexico, another familiar state in this crisis, is at $7,423 a year including interest. Alongside this, Georgia ($7,213) and Florida ($7,178) both exceed the national average by ~13-14% each year.
Which states miss the most auto loan payments?
| Rank | State | Percentage of people who missed their car payments in Q4 2024 |
| 1 | Mississippi | 7.12% |
| 2 | Georgia | 6.76% |
| 3 | Alabama | 6.48% |
| 4 | Louisiana | 6.28% |
| 5 | Indiana | 5.92% |
| 6 | South Carolina | 5.89% |
| 7 | Michigan | 5.77% |
| 8 | North Carolina | 5.75% |
| 9 | Delaware | 5.71% |
Then there are those who have definitely committed to more than they can afford. Delinquency or missed payment rates reveal where borrowers are already falling behind in paying back their car loan debt.
While the national average sits at 4.8% some states severely excel above this. Mississippi almost doubles this rate, with 7.12% of borrowers missing car payments in Q4 of 2024. The high living costs and financial instability mean that residents fall behind on their payments. In contrast, Utah has only 2.5% of borrowers falling behind. [6]
Even in states with lower overall burden, such as Alabama (6.48%) and West Virginia (4.77%), delinquency rates remain elevated compared to the national benchmark.
How do auto loans compare with other bills?
Housing remains the largest drain. According to the National Association of Realtors, in September 2025, mortgage rates averaged at 6.72% meaning that the monthly mortgage payment was approximately $2,232 (assuming a 20% downpayment on a home priced $400,000). [9] This would mean that mortgage payments take up 53.5% of yearly national disposable income. When stacked side by side, America’s car loan burden now represents roughly a quarter of the average mortgage payment, a striking reminder of how transportation debt has grown into one of the biggest financial drains after housing itself.
Other major costs show how significantly auto debt now stacks up. The average cost of employer-sponsored healthcare for a thirty year old U.S. citizen is $505 a month [10] (long- term this works out at 12.1% of yearly disposable income) and the average student loan payment is between $200-$299 a month (8.4% of disposable income), [11] making car loans notably more expensive than student debt for most borrowers.
| Expense | Est. Monthly Cost |
| Mortgage Payment | $2,232 |
| Car Loan Payment | $516 |
| Employer-Sponsored Healthcare | $505 |
| Student Loan Payment | $200–$299 |
How to avoid missed auto loan payments?
For many, a car isn’t just a convenience; it’s a necessity, meaning that car loans are often the only answer to getting from A to B, whether that’s work, school or family. If you’re worried about becoming one of these statistics who are missing payments and borrowing more than they can afford, we’ve got you covered.
Stick to your budget
The biggest issue we’ve seen in our data analysis is people borrowing more than they can afford to. Keep it simple, don’t chase the latest, newest model. Keep your auto expenses under 15% of your disposable income by mapping out your recurring expenses such as food, house, insurance, savings and see how a car loan can fit in.
Set up automatic payments
Don’t rely on your own memory. If auto payment options are available make sure you opt in and don’t miss a due date because your to-do list is too long.
Communicate if you struggle
If your financial situation changes and payments feel too tight, don’t wait until it’s too late. Lenders, like us, can work with you for solutions to avoid missed payments.
Should I get an auto loan now?
Deciding whether or not to take out a car loan is a big financial decision and with interest rates sitting at a national average of 9.1%, according to our data, it’s an even bigger burden. The decision can come down to three main factors:
What you can afford
Ask the question: Can I afford to take out a car loan right now, and if so, what’s the furthest my money can comfortably stretch? This may mean that you don’t get the latest model, perhaps have to choose a used car, or something a bit more sustainable for your income.
If you need a car
If having reliable transport is non-negotiable, then a car loan may be the only way you can purchase a vehicle. If a car is just a “want” then committing to a loan may not be for you right now.
The loan terms
Do your research and shop around. Car loans come in all shapes and sizes, different prices, different interest rates and different lengths. Take the time to consider what suits you and your circumstances the most before you jump in to a thousand dollar deal.
If you’ve got bad credit then this can impact the type of loan you can get, but it may not write you off completely. Discover how to get a car loan with bad credit so you can still get the transport you need, despite your credit rating.
Methodology
Statistics for this report were collected in September 2025.
2024 Q4 auto loan yearly figures were derived from Q4 2024 state-level figures, reflecting average yearly costs and 68-month loan terms.
The latest delinquency rates represent the percentage of borrowers who are missing payments, providing context on where high burdens are translating into real financial strain.
Used car APR and New Car APR interest rates were taken for each state, and an average was created between the two. An “estimated yearly interest” column was included to approximate how much interest households are paying on loans.
Disposable Income figures were taken from the latest BLS Wage Data.
Tax data were from the latest 2025 tax brackets.
Total payments over 68-month terms are the projected cost of loans over a 68-month period, used to illustrate long-term financial obligations.
The income-to-debt ratio was calculated by the percentage of disposable income devoted to yearly car payments. This is the central figure used to rank states. Calculated at disposable income divided by the auto loan yearly payment plus interest.
Limitations:
- Auto loan averages do not capture variations by vehicle type (new vs. used) or borrower credit tier.
- Disposable income varies within states, meaning some households face significantly higher or lower burdens than the averages suggest.
- Delinquency data reflects missed payments but does not account for partial payments or restructuring agreements.
Sources
[1] Auto Insurance, ‘Car Ownership Statistics’, 2025. Accessed September 2025.
[2] Experian, ‘Average Car Payments’, 2025. Accessed September 2025.
[3] U.S. Bureau of Labor, ‘Income in the Past 12 Months (in 2024 Inflation-Adjusted Dollars)’, 2025. Accessed September 2025.
[4] Tax Foundation, ‘2025 Tax Brackets’, 2026. Accessed September 2025.
[5] Consumer Financial Protection Bureau, ‘Rising car prices means more auto loan debt’, 2022. Accessed September 2025.
[6] Federal Reserve Bank of New York, Center for Microeconomic Data. Accessed September 2025.
[7] Federal Reserve Bank of St. Louis. Consumer Price Index for All Urban Consumers: New Vehicles in U.S. City Average, 2025. Accessed September 2025.
[8] U.S. DEPARTMENT OF AGRICULTURE, ‘Share of Personal Income Spent on Food’, 2025. Accessed September 2025.
[9] National Association of Realtors Magazine, ‘Mortgage Rates Fall’, 2025. Accessed September 2025.
[10] Forbes, ‘How Much Does Health Insurance Cost’, 2025. Accessed September 2025.
[11] US News, ‘Average Student Loan Payment’, 2025. Accessed September 2025.
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