What is the car loan crisis in 2025?
Asked by: Aryanna Konopelski | Last update: February 2, 2026Score: 4.8/5 (27 votes)
The 2025 car loan crisis is characterized by record-high delinquencies, surging repossessions (on par with the Great Recession), and ballooning negative equity, driven by elevated car prices, higher interest rates, and renewed financial pressures like student loan payments, causing many borrowers, especially in the subprime bracket, to fall behind on payments despite relatively low unemployment and a strong stock market.
Are car repossessions up in 2025?
Yes, car repossessions were significantly up in 2025 and projected to hit record levels, driven by high vehicle prices, elevated interest rates, and persistent inflation, pushing many consumers, especially subprime borrowers, past their breaking point, with figures expected to exceed 3 million vehicles for the year, comparable to the Great Recession era.
Are car loans going to go down in 2025?
The Role Of Credit In 2025 Auto Loans
As it's likely that auto interest rates will go down in 2025, those with higher credit scores will benefit the most from lower APRs. On the other hand, consumers with subprime credit will still face higher loan rates, though these rates may be lower than in 2024.
Is it better to buy a car now or wait until 2025?
You should buy a car now (late 2025/early 2026) for better deals on outgoing 2025 models and potential EV tax credits, but wait for late 2025/late 2026 if you need the best manufacturer incentives (0% APR) or if your budget allows for potential price increases on 2026 models and you want to benefit from falling interest rates. If you need an EV, buy before September 30, 2025, to secure the federal tax credit, but if you can wait, late 2025 offers good deals on remaining 2025s.
What is a good APR for a 72 month car loan?
A good 72-month car interest rate (APR) is generally considered to be under 7% for new cars and under 12% for used cars, depending heavily on your credit score, but rates can vary from low 4% to over 10% or more, with top credit scores getting rates around 4-5% and lower scores facing much higher rates. Rates are always changing with market conditions, so compare offers from credit unions and banks.
Why Car Payments Are RUINING Finances in 2025
How much is a $35,000 car loan payment for 72 months?
For a $35,000 car loan over 72 months, your monthly payment depends heavily on the Annual Percentage Rate (APR), but expect payments ranging roughly from $550 to $700+, with lower APRs like 4% yielding around $548/month and higher rates increasing the cost significantly, factoring in principal, interest, taxes, and fees. A 6% rate could be about $615, while a higher 9% might push payments towards $680-$700, highlighting how interest rate dramatically impacts your budget.
What's the smartest way to pay for a car?
The best way to pay for a car depends on your finances, but generally involves a large down payment (20%), a short loan term (4 years or less), and keeping total transportation costs under 10% of income, with paying cash for a used car being ideal to avoid interest, while for new cars, the "combo play" of a big down payment plus low-interest financing often works best to leverage dealer deals without overspending, using secure methods like bank transfers or cashier's checks at the bank.
Are car prices crashing in 2025?
A full "crash" isn't expected in 2025, but the car market is shifting from a seller's to a buyer's market, with rising inventory, increased discounts on high trims (especially EVs and large trucks), easing prices on popular models, and growing affordability challenges pushing some buyers out. Dealerships are seeing lower confidence due to these shifts, but consumers can benefit from more negotiation power, particularly on outgoing 2025 models as 2026 inventory arrives, with potential for modest price drops and better incentives.
Why Dave Ramsey says not to finance a car?
Dave Ramsey advises against financing cars because they are depreciating assets, meaning they lose value, trapping you in debt on something that costs you money, preventing wealth building, and leading to being "upside down" (owing more than it's worth). Instead, he promotes saving and paying cash for reliable, affordable used cars to build wealth, avoid interest, and stay in control of your money, viewing car payments as holding you in the middle class rather than helping you succeed financially.
What should a $30,000 car payment be?
For a $30,000 car, average monthly payments vary but typically fall between $300 and $550+, depending heavily on your down payment, loan term (3-6 years), and interest rate (APR); for example, a 5-year loan with 6% APR and a small down payment might be around $520, while a shorter term or higher rate increases the payment.
How much is $40,000 car payment for 60 months?
A $40,000 car payment over 60 months results in monthly payments typically ranging from about $700 to over $900, heavily depending on your interest rate (APR); for example, at 7% APR it's around $800/month, while lower rates (like 2.9%) could mean about $750/month, with higher rates pushing it towards $900 or more, plus thousands in total interest paid over the loan term.
Will interest rates ever drop to 3% again?
It's highly unlikely that general interest rates, especially for mortgages, will drop back to 3% anytime soon (in 2026 or 2027), despite some forecasts of rate cuts, as current economic conditions like inflation and high national debt suggest rates will likely stay higher than pandemic lows, possibly hovering around 6% for mortgages, though some extreme economic shifts or specific assumptions could create temporary pockets near 3%.
What's the worst month for car sales?
The slowest months for car sales are typically January and February, following the busy holiday season, as consumers recover financially and winter weather discourages shopping, though some sources also point to summer dips or specific lulls around transitions. January is often cited as the absolute slowest due to post-holiday spending and colder weather, while February can also be slow as people deal with tax-related finances.
How to park your car to avoid repo?
To avoid car repossession through parking, keep the vehicle in a locked, private garage or storage unit where repo agents can't legally enter without breaching the peace, as they can take cars from driveways or public spots. You can also try parking in tight spots or alleys, moving it frequently to avoid predictable patterns, but know that lenders can still track and seize it, often leading to court action if hidden long-term, so communicating with your lender or exploring legal options like Chapter 13 bankruptcy are better long-term solutions.
Are people defaulting on car loans?
Auto lending is in turmoil, with delinquencies and defaults rising across income levels and credit tiers. Some 2.2 million cars have been repossessed so far this year — the highest number since the Great Recession.
Why does Suze Orman say not to lease a car?
But according to personal finance expert and New York Times bestselling author Suze Orman, you should never lease one. “Leasing a car is the biggest waste of money out there. You only get to drive at 12,000 miles. You have to have a lease gap insurance.
How much should I spend on a car if I make $60,000?
On a $60,000 salary, aim for total car expenses (payment, insurance, gas, maintenance) under $450-$600/month (10-15% of take-home pay) or a total purchase price around $20,000-$25,000 for a conservative approach, but consider a higher price (up to $40k) if you have a large down payment and strong budget, balancing this against savings and other financial goals.
What is the 11 word phrase to stop debt collectors?
The 11-word phrase to stop debt collectors is: "Please cease and desist all calls and contact with me, immediately." This phrase leverages the Fair Debt Collection Practices Act (FDCPA) (FDCPA) to legally require collectors to stop most communication, though they can still notify you of lawsuits or the end of collection efforts, and you must send it in writing for it to be effective.
Is it better to wait until 2025 to buy a car?
Key Takeaways. For most, the best time to buy a new car is during year-end sales from Late November through December 2025. Waiting until 2026 likely means higher prices. Federal tax credits for both new and used EVs expire on September 30, 2025, making this the final window to capture thousands in savings.
What month is the cheapest to buy a car?
The cheapest months to buy a car are typically October, November, and especially December, due to dealers trying to meet yearly sales goals and clear out old models for new inventory, with January and February being a close second as a slower period with post-holiday deals. Other great times include the end of the month/quarter (March, June, September) and around major holidays like Presidents' Day or Labor Day.
Can you still drive gas cars after 2035?
Yes, you can still drive gasoline (gas) cars after 2035, as regulations primarily ban the sale of new gas cars in certain states, not the ownership or use of existing ones; you'll still be able to buy used gas cars, but finding gas stations might become harder and more expensive over time, notes.
How much is $40,000 car payment for 60 months?
A $40,000 car payment over 60 months results in monthly payments typically ranging from about $700 to over $900, heavily depending on your interest rate (APR); for example, at 7% APR it's around $800/month, while lower rates (like 2.9%) could mean about $750/month, with higher rates pushing it towards $900 or more, plus thousands in total interest paid over the loan term.
What is the four square trick at a car dealership?
Zach Shefska says the whole point of a four square is to focus a buyer's mind on a monthly payment instead of the total price of the vehicle. “Sales managers are trained to talk about monthly payment. By talking about monthly payment, you're obfuscating variables that are profit centers for the dealership,” he says.
Do car dealers like cash buyers?
Paying cash may hinder your chances of getting the best deal
"When dealers are negotiating the purchase price, they anticipate making money on the back end, via financing," Bill explains. "So if you tell them up front you're paying cash, the dealer knows he has no opportunity to make money off you from financing.