Drivers across the District, Maryland and Northern Virginia are taking on record levels of car debt as vehicle prices, interest rates, insurance costs, and gas prices continue squeezing household budgets, according to a new report released Wednesday by The Century Foundation and Protect Borrowers.
The report found that Americans now owe $1.68 trillion in auto loan debt, the highest amount ever recorded, with 86 million people carrying vehicle loans nationwide. Researchers found the average new auto loan reached $33,519 in 2025, about $10,000 higher than in 2018, while average monthly payments climbed to $680, a 38 percent increase over the same period.
In the District, 93,445 residents now carry auto loan debt, according to the report. The average new loan balance in Washington reached $28,225, while the average annual percentage rate on new loans climbed to 12%.
Maryland reported more than 1.59 million residents with auto debt and average new loan balances of $33,982.
Virginia reported more than 2.2 million borrowers carrying auto debt, with average new loan balances reaching $31,907.
“For the overwhelming majority of working families, a car is a necessity—yet purchasing a car has become a financial trap, eating up more of people’s paychecks than ever before,” Angela Hanks, chief of policy programs at The Century Foundation and co-author of the report, stated in the release. “As auto prices and interest rates have soared, millions of families have been forced to turn to costly, extended-term loans in order to keep up with their monthly payments. And while families drown, the Trump administration is refunding big businesses for the tariffs that consumers paid, with interest.”
The report blamed rising vehicle costs and historically high interest rates for much of the financial pressure, noting that tariffs helped push the average cost of a new vehicle to nearly $50,000 nationwide. Researchers found that more consumers are turning to seven-year auto loans simply to reduce monthly payments, even though the longer loans leave borrowers paying thousands more over time.
According to the study, the share of seven-year or longer auto loans has doubled since 2018 and now accounts for nearly 13 million borrowers nationwide. Researchers found those loans add an average of $5,868 in additional interest compared with a traditional four-year loan.
The study also found that borrowers with extended loan terms are falling deeper into other forms of debt. Middle-income borrowers carrying auto loans saw credit card balances grow 31%, compared with 17% among people without auto debt. Borrowers with seven-year loans were spending roughly 20% of their monthly income on car payments, often relying on credit cards to cover groceries and other necessities.
Researchers found that borrowers with the lowest credit scores paid average annual percentage rates of 18.7%, roughly three times higher than borrowers with top-tier credit scores paying 6.3%. The report also stated that Black, Hispanic, and American Indian borrowers were charged higher interest rates across all credit levels.
“The costs of purchasing and financing a car have been going up for years,” Tara Mikkilineni, senior fellow at Protect Borrowers and co-author of the report, stated in the release. “Unfortunately, the Trump administration’s reckless actions on the economy and the expensive fallout from the war in Iran has made it harder for working families to purchase a car and has left millions more feeling major pocket pain at the pump. For millions of working families, a car is not a luxury, it is an essential economic lifeline. Working families deserve relief and they deserve to have a government that is watching out for them, not allowing lenders and auto dealers to rake in record profits at their expense.”
