American auto loan debt is more than $1.7 trillion.
U.S. auto sales had a good year in 2025, rising nearly 2 percent from 2024, and recording their highest annual sales volume since 2019, according to WalletHub, a personal finance website. Forecasts predict that the market will decline during 2026, with new-vehicle sales expected to fall by 2.9 percent from 2025.
Along with increased auto purchases comes increased auto loan debt. Money people owe for auto loans has grown substantially over the past decade, increasing by another $28 billion in the second quarter of 2026 to $1.71 trillion, according to the Federal Reserve Bank of New York.
To find out where Americans are spending the most on their vehicles, WalletHub compared the median auto-loan balance and income in more than 2,500 U.S. cities.
“Many Americans are overspending on cars,” Chip Lupo, WalletHub analyst,” said in an email. “In over 170 cities, the average resident’s auto loan debt is the equivalent of half or more of their yearly income.”
Lupo said residents dealing with these expensive loans on top of debt from credit cards, personal loans, student loans, and mortgages are at risk of falling behind on payments and having their vehicles repossessed.
“Buying less-expensive, used vehicles or saving up money to minimize loans can help prevent unsustainable auto loan debt,” he said.
Cities where people have the most auto loan debt
1.Rio Grande City, Texas
2. Donna, Texas
3. Pine Bluff, Ark.
4. Mercedes, Texas
5. Abbeville, La.
6. Leeville, La.
7. San Juan, Texas
8. Eagle Pass, Texas
9. San Benito, Texas
10. Uvalde, Texas
Key findings from the WalletHub report
Rio Grande, Texas, is the city where people overspend the most on cars because the median auto loan debt is $33,802 while the median income is $36,715. That means the ratio of residents’ auto loan debt to their income is 92 percent, the highest in the country by a large margin.
Donna, Texas, takes second place with a median auto loan debt of $28,361 and a median income of $31,889. The median auto loan debt is 89 percent of the median income.
While Donna’s auto loan debt-to-income ratio is a step down from Rio Grande’s, it’s still extremely high considering that more than 680 out of the more than 2,500 cities in the study have ratios of 25 percent or below.
Pine Bluff, Ark., ranks third among cities where people overspend the most on cars. The median auto loan debt in the city is $34,206 and the median income is $40,227, which is a 85 percent auto loan debt-to-income ratio.
The study on debt-to-income ratio only considered auto loans. Many residents likely carry debt from credit cards, personal loans, student loans, and/or mortgages.
Mistakes people make when shopping for cars
- Falling in love with a car on the lot before checking your budget.
- Failing to make a large enough down payment.
- Stretching the loan to 84 months to make the monthly payment.
- Skipping research such as comparing prices, checking reliability ratings, and understanding the total cost of ownership, including insurance, fuel, depreciation, and maintenance.
- Paying for unnecessary add-ons and accessories.
- Buying a different new or used car when you should keep your car longer.
- Choosing a new car, which depreciates quickly, rather than a used car.
Good luck with car shopping. I’ll need one soon, and I dread shopping for it.
