More and more car buyers are extending their loan terms just to afford a vehicle, yet their monthly payments keep climbing higher.

Data released by the car website Edmunds shows that in the third quarter, 25.5% of buyers who financed a new vehicle chose loan terms of 84 months or even longer, up from 21.8% in the same period last year, setting a record high. During the same period, the average monthly payment for a new car reached $787, up from $756 a year earlier.

Joseph Yoon, a consumer insights analyst at Edmunds, said: "The persistent rise in monthly payments stems from a substantial increase in the overall amount buyers are borrowing."

According to Edmunds data, the average new car loan amount in the third quarter hit a record $44,664, compared with $42,744 in the same period last year. Data from the vehicle pricing firm Kelley Blue Book shows that the average transaction price for a new car in August was $50,089, up 1.9% year over year.

Yoon said: "If you need an 84-month loan just to barely afford the monthly payment, that is a potential red flag 鈥?this car is beyond your budget. You could consider buying a used car, choosing a lower trim level, prioritizing essentials over features, or saving for a longer period to increase your down payment."

Consumer budgets remain under pressure. Persistent inflation is squeezing household budgets, and car loan terms keep getting longer.

Data from the U.S. Bureau of Economic Analysis released on Wednesday showed that in August, consumer spending exceeded income levels.

Jeremy Robb, chief economist at Cox Automotive, said in a report published on Monday: "The gap between income and spending has been widening for several consecutive months, with consumption largely funded by investment accounts rather than wage income. If energy prices remain elevated and the Middle East conflict cannot be resolved, this income-spending gap will become increasingly difficult to sustain."

Since the outbreak of the Iran conflict in late February, global oil prices have pushed up U.S. gasoline prices. According to AAA data, the average price of regular unleaded gasoline on Monday was $4.36 per gallon, down from $4.47 the previous week, but far above the $3.13 seen in the same period last year.

There is little room for relief in financing costs. According to Edmunds data, the average annual interest rate on new car loans in the third quarter was 7%, unchanged from the previous quarter and the same period last year.

Robb noted in his report that U.S. Treasury yields have continued to rise, with rates on all types of car loans climbing across the board last week. Treasury yields influence interest rates on various consumer loans, and the market is currently grappling with concerns over Federal Reserve rate hikes and fiscal policy.

Patrick Manzi, chief economist at the National Automobile Dealers Association, an industry group representing car dealers, said: "Most car loans are tied to 5-year or 10-year Treasury notes, and we expect borrowing costs to continue rising in the fourth quarter."

Roughly one in five car buyers has a monthly payment exceeding $1,000. According to Edmunds data, among those who financed a car in the third quarter, 21.2% had monthly payments of $1,000 or more, a record high, compared with 19.1% in the same period last year. Among buyers with four-figure monthly payments, 69% chose loan terms of 72 months or longer.

Longer loan terms come with additional costs: borrowers end up paying more interest over the life of the loan. In the third quarter, the average total interest paid over the life of a car loan reached a record $9,938, up from $9,442 last year.

Longer loan terms also mean vehicle equity accumulates more slowly. If a car is sold or traded in before the loan is paid off, it is easy to end up owing more than the vehicle is worth (negative equity).

Yoon explained: "In the first few years of an 84-month loan, almost your entire monthly payment goes toward interest, with barely any principal being repaid. Combined with normal vehicle depreciation, you will likely be in a negative equity position for most of the loan term."

This problem is becoming increasingly common. Another set of Edmunds data shows that in the second quarter, nearly 30% of vehicles traded in for new ones had negative equity: the remaining loan balance on the old car exceeded the vehicle's value. In such cases, buyers must either pay off the remaining balance in a lump sum or roll the old car's debt into the new car loan.