States Where Auto Loan Debt Is Increasing the Most

Millions of Americans rely on auto loans to buy their vehicles, driving total auto loan debt to nearly $1.7 trillion. As of Q2 2025, the average household owes about $13,800 just a few hundred dollars below the record high.

But the pace of auto loan debt growth isn’t the same everywhere. Some states are increasing balances faster than others. To show where auto loan debt is increasing the most and where it’s less of an issue WalletHub analyzed its proprietary consumer debt data.

“From Q1 2025 to Q2 2025, residents of most states either had a less than 1% increase in their average auto loan balance, or actually had that average decrease. A few states had more dramatic increases, reaching nearly 2.4%, which suggests that people in some states are more affected by inflation in car prices or are biting off more than they can chew when it comes to loans.”

John Kiernan, WalletHub Editor

Main Findings

States Where Auto Loan Debt Is Increasing Most

Note: No. *1 = Largest Auto Loans Debt Increases

In-Depth Look at the States With the Largest Auto Loan Debt Increases

Vermont

Vermont residents have seen the highest increase in their average auto loan balance, which now stands at $21,792, reaching that number after increasing their average by over 1.8% between Q1 2025 and Q2 2025. Vermont residents pay the ninth-highest monthly auto loan amount, averaging $539, the climb underscores the growing financial strain of vehicle debt in the state.

One bright side for Vermont car owners is that while their auto loan balances are increasing, the state still ranks 22nd in the nation for overall car ownership and maintenance costs. This slightly above average ranking eases some of the pressure from higher monthly payments.

It’s worth noting that while Vermont residents are increasing their auto loan debt at a fast rate, they’re accumulating other debt at a slow pace. In fact, Vermont ranks second last when it comes to credit card debt increases by state.

Delaware

People in Delaware have a relatively low average auto loan balance compared to most states, at $19,767. However, their debt increased by nearly 2.4% between Q1 2025 and Q2 2025, marking the biggest increase nationwide. Delaware residents pay an average of $486 per month toward their auto loan debt.

To put things in perspective, the average auto loan balance increased by well below 1% in most states, and it actually decreased in 15 of them.

Delaware’s surge in auto loan debt points to broader financial distress, with the state now ranking 14th nationally. Rising costs of living and heavier financial obligations may be leaving residents with little flexibility, pushing auto loan balances higher.

New Mexico

The average auto loan balance for New Mexico residents increased by around 1.1% between Q1 2025 and Q2 2025. That brought the average dollar amount to $22,133, the fifth-highest in the country.

New Mexico residents’ behavior with auto loans differs slightly from their habits when it comes to credit cards, as they have the 21st-lowest average household credit card debts.

Overall, people in New Mexico seem to be managing their borrowing more cautiously. The state has a very low number of people with accounts in financial distress, meaning fewer residents have had to defer payments due to financial difficulty.

Tips for Paying off Auto Loan Debt

• Accelerate your payments: Consider making extra payments on your auto loan whenever possible. Paying more than the minimum amount each month reduces the principal faster, ultimately saving you money on interest and shortening the overall repayment period. Just make sure the lender won’t penalize you for paying off the loan early.
• Refinance for better terms: Explore the possibility of refinancing your auto loan to see if you qualify for a lower interest rate or more favorable terms. Refinancing can potentially reduce your monthly payments or enable you to pay off the loan more quickly. If you have good or excellent credit, you could also consider moving your debt to a balance transfer credit card with a promotional 0% APR.
• Set up automatic payments: Setting up automatic payments is good practice for any loan, as it prevents you from being late as long as you have sufficient funds in your bank account. Some auto lenders may even give you a discount for setting up autopay.
• Budget carefully: Taking the time to create a monthly budget and stick to it will help you organize your finances and put as much money as possible toward paying off your loan. Try to cut out as much unnecessary spending as you can until you’re free of debt.
• Increase your income: You’ll have more money to put toward paying off your auto loan if you work extra hours, get a part-time side job, or otherwise boost your income.

Methodology

In order to determine the states with the largest auto loan debt increases, WalletHub compared the 50 states across two key dimensions: 1) Change in Auto Loan Debt and 2) Average Auto Loan Balance & Monthly Payment.

We evaluated the states using three individual metrics, which drew from WalletHub’s proprietary data on consumer debt. The metrics are listed below with their corresponding weights, each metric being graded on a 100-point scale.

Finally, we determined each state’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.

Change in Auto Loan Debt – Total Points: 70

• Change in Average Auto Loan Balance (per Tradeline) – Q2 2025 vs Q1 2025: Full Weight (~70.00 Points)

Average Auto Loan Balance & Monthly Payment – Total Points: 30

• Average Auto Loan Debt Balance (per Tradeline) Q2 2025: Full Weight (~15.00 Points)
• Average Monthly Auto Loan Payment (per Tradeline) Q2 2025: Full Weight (~15.00 Points)

 
Sources: Data used to create this ranking were collected as of October 2, 2025 from WalletHub database.

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