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American households carry $1.66 trillion in auto loan balances collectively, according to the Federal Reserve. While there may be many different excuses that justify taking on massive auto debt, for Emmanuel from Texas, that justification appears to be a “super difficult mother-in-law.”
As he explained to Dave Ramsey on a recent episode of The Ramsey Show, Emmanuel purchased a car, despite being unemployed, because he didn’t want to rely on his mother-in-law’s vehicle. Making matters worse, Emmanuel bought a car he couldn’t afford and now owes $56,000 on the auto loan, with the monthly payments coming in at $1,200.
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“I’m sorry, there are no family dynamics that require a $56,000 car; That’s absolute bullcr-p,” said Ramsey. “What kind of ridiculous family dynamic causes you to buy a $60,000 car you can’t afford?”
As Emmanuel struggled to justify his purchase, Ramsey and his co-host Jade Warshaw were left incredulous. But the unfortunate reality is that Emmanuel is not alone, and his story highlights how an irrational car obsession has driven many Americans into unsustainable debt.
The auto loan crisis
The rising cost of cars, along with rising interest rates, has created a double whammy for the average American family’s transportation costs in recent years. According to CarEdge, as of January, 2025, the average new car price is $49,740. Meanwhile, the average auto loan interest rate is 6.84% for new cars, per Edmunds.
Families are also increasingly burdened by the service costs associated with their vehicles. Drivers pay $2,678 annually on average for car insurance as of March 2025 — a 12% increase since 2024.
If you find yourself saddled with larger insurance bills, there might be ways to reduce your monthly car expenses.
You can shop around and compare auto insurance quotes from leading providers near you for free through OfficialCarInsurance.
Here’s how it works: Enter some basic information about yourself and the make and model of your car, and OfficialCarInsurance will sort through their database of thousands to display the lowest rates available.
Compare offers from leading insurance companies like Progressive, Allstate, and GEICO, and unlock rates as low as $29 per month. The best part? This process is entirely free and won’t impact your credit score.
Miscellaneous costs of owning a car are also on the rise. Due to high interest rates and unpredictable gas prices, American drivers spend 20% of their income on car-related expenses, while one in ten drivers spend more than 30%, according to Marketwatch Guides. Meanwhile, Edmunds reports that 4.2% of drivers are paying more than $1,000 in monthly car payments.
If you bought your car a few years ago when rates were sky-high, or your credit score has improved since then, you might be able to negotiate a lower interest rate on your auto loan. The result? Lower monthly payments or the ability to pay off the loan quicker.
LendingTree is an online marketplace that allows you to browse the rates offered on auto refinance loans from top lenders near you.
Depending on your credit score and car payment history, you can get customized offers from lenders near you within minutes. From there, you can compare the offers and apply for a refinance loan with your preferred lender.
You can use LendingTree’s auto-refinance calculator to estimate your monthly savings by refinancing.
Read more: Car insurance premiums could spike 8% by the end of 2025 — thanks to tariffs on car imports and auto parts from Canada and Mexico. But here’s how 2 minutes can save you hundreds of dollars right now
Immediate action
Although Ramsey and Warshaw acknowledge Emmanuel’s need for freedom and personal boundaries with his mother-in-law, they both agree that an expensive, unaffordable car is not the best solution. Taking on this debt, despite his financial situation, was also a reckless and “stupid decision,” according to Ramsey.
If you find yourself in a similar situation and are trying to escape the debt cycle, consolidating your outstanding loans into a single one could be a good place to start. This way, you can end up with only one loan at an ideally lower interest rate, helping you get out of debt quicker.
With Credible, you can compare rates offered on debt consolidation loans from lenders near you.
You can get approved for loans up to $200,000 at the lowest possible interest rate in just three simple steps. Fill out one form, and Credible will show you offers from lenders like Discover, Upstart, SoFi, and more. Then, you can apply for a loan from your preferred lender.
Checking the rates with Credible is entirely free and won’t hurt your credit score.
What’s more, if you close with a better rate than you prequalify for, you can get a $200 gift card from Credible.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
