Humphrey Yang Says Car Payments Are the Most Dangerous Financial Trap in America — Is He Right?
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Josephine Nesbit
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Jenna Klaverweiden
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Although the average transaction price (ATP) of a new vehicle scaled back from December, $49,191 was still an all-time high for January, according to data from Kelley Blue Book. And the ATP isn’t the only thing that’s increased.
In a YouTube video, financial influencer Humphrey Yang broke down how car payments have quietly doubled in length since the 1960s, calling them the most dangerous financial trap in America.
Is he right? Here’s what experts have to say.
Also see four ways to avoid having a car payment of $1,000 a month.
Car Payments Are on the Rise
Citing data from the Federal Reserve, Yang pointed out that the majority of car loan terms at commercial banks were between 31 and 36 months in 1963. Today, the average U.S. car loan term hovers around 69 months — more than double the length of most loans in the 1960s.
According to Edmunds, the average monthly payment on a financed new-vehicle purchase was $772 in the fourth quarter of 2025, an all-time high. Additionally, more than 1 in 5 new-car shoppers committed to a monthly payment of $1,000 or more.
Yang blamed three major forces: wage stagnation vs. car price inflation, longer loans are more profitable and longer loans lead to more expensive cars.
Stretching out a car loan does reduce the monthly payment, but it also means car buyers pay more in interest. The chance of missing a payment or being underwater on the car loan increases, and it also gives dealerships an opportunity to sell a more expensive car while still staying within a car buyer’s monthly budget.
Are Car Payments the Most Dangerous Financial Trap?
“People spread out the loan term to be able to afford a more expensive vehicle. So there is a lower payment, but you are paying more interest,” explained Ashley Morgan, a debt and bankruptcy lawyer at Ashley F. Morgan Law PC in Northern Virginia. “Most people do not worry about the out-of-the-door price; they worry about your monthly payment.”
And there are a lot of people who put little to nothing down, Morgan pointed out. This means little to no equity when you purchase the car, and it could also mean the car is depreciating quicker than the loan is being paid down.
“Sometimes on these longer loans, people have negative equity rolling into cars multiple times,” Morgan said. “I have seen people owe $50,000 on a car that is worth only $25,000 due to prior trade-ins and the current payment terms of the loan.”
Without a car loan, you have more money in your budget to potentially save and grow your wealth.
“I advise people that after you finish paying off a car loan, you want to continue to pay that car loan each month into savings,” she explained. “This savings trick helps you save for a future vehicle and possibly have a good down payment or even pay for your next vehicle in cash.”
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