From Student Loans to Retirement Gaps, Why High Car Payments Are the Extra Burden No Generation Can Afford

Caribou's survey finds that most borrowers across generations can benefit by saving money on their car loan.

Americans across every generation are navigating a version of the same problem: a car payment that takes up more of the household budget than it should. But Caribou's new survey of 2,000 U.S. auto loan holders finds that most borrowers, regardless of age, have never refinanced their loan, even when doing so could free up real money every month.¹ And the stakes look different depending on where they are in life.

With limited credit history and car buying experience, younger borrowers feel most pressured.

For Gen Z borrowers (ages 18-31), the financial picture coming into a car loan is already complicated. These young adults are often carrying auto loan debt at the time when they're also saddled with high student loans and housing costs.

Many took out their first car loan with limited car buying experience and credit history, which typically means higher interest rates from the start. Over half (52%) felt pressured during the original financing process, the highest of any generation.

The financial pressures this generation faces could help explain why 35% of Gen Z respondents struggled to make their car payment on time in the past year, more than twice the rate of Baby Boomers (13%). Another 46% strongly agree that saving $150 a month would make their life significantly easier, the highest across generations.

Nearly half (44%) have considered checking to see if they qualify for a better interest rate on their auto loan, but haven't followed through. Over a quarter (26%) say they don't think they'd qualify. Given that Gen Z's average FICO score recently dropped to 676-39 points below the national average-due to student loan delinquencies, credit card debt, and the compounding effects of high inflation and high rates, that hesitation is not unfounded.² But it means a generation that is already stretched is leaving potential relief untouched.

Millennials aren't chasing a better rate. They're looking for breathing room.

Millennials (ages 32-46) are the most financially self-aware generation in the survey, reporting the highest levels of confidence in their personal finance knowledge. They're also the most likely to act: 26% have already checked and qualified for a lower rate on their car loan, compared to 14% of Gen X and 8% of Baby Boomers.

Millennials aren't engaging with their car loans in a vacuum. They're particularly motivated because of other family priorities. Many are now moving into the "sandwich generation" - caring for both young children and aging parents - with less financial security than the Gen Xers who came before them.

Caribou's survey reflects that squeeze. A fifth (20%) of Millennials find their monthly car payment somewhat or very difficult to afford. Their strongest reason for considering refinancing is a lower monthly payment (37%), over a lower interest rate. When asked what they'd do with $150 back in the budget, their top three answers were to pay down other debt, build emergency savings, and cover everyday expenses like groceries and gas.

As everyday costs rise, more Millennials are taking a closer look at their car loan to find breathing room each month. Nearly two-thirds say they're somewhat or very likely to consider refinancing in the next 12 months, the highest of any generation. Among those who have already done it, 88% say they'd recommend it to someone else. When Millennials find relief, they tend to share it.

Gen X has earned some financial stability. Refinancing could help protect it for retirement.

For Gen X borrowers (ages 47-61), the financial burden of car ownership looks more stable than it does for younger generations. They report less payment strain, they've built financial footing through their peak earning years, and many feel settled in their current loan terms. That stability is real, but for some, it's also creating a blind spot. Only 19% of Gen X respondents have checked whether a better car loan is available.

Twenty-nine percent of Gen X say they haven't pursued refinancing because they already have a low rate or payment, the highest share of any generation. That's a reasonable instinct. But with 28% of Gen X borrowers claiming they didn't get the best deal at purchase, it's worth asking whether the rate they locked in still reflects the best available terms today.

When it comes to car payments, manageable and optimal aren't the same thing. Gen X is now entering a critical window before retirement, making every recurring monthly cost worth a second look. A majority (63%) of Gen X borrowers say new car prices have increased, and of that group, approximately half expect to keep their current vehicle longer, meaning more of them are staying in existing loans. This makes for an ideal moment to check whether their current rate still makes sense.

For Baby Boomers, lowering monthly car payments can stretch their fixed incomes.

Baby Boomers (ages 62-80) represent the most disengaged generation in the survey. Sixty-one percent have never checked to see if they qualify for a better loan and have never considered doing so, the most significant disengagement across generations. Only 16% have ever refinanced their car loan.

This matters because Baby Boomers are staying in their vehicles. Nearly 7 in 10 Baby Boomers noticed that new car prices have risen in the past year, and of that group, 57% say they'd keep their current vehicle longer rather than buy new. They are more committed to their existing loans than ever.

What the data shows is that they're actually in a strong position to revisit their car loan. Forty-three percent of Baby Boomers have a credit score between 800 and 850-by far the strongest credit standing of any generation-which would help them qualify for better rates.

The stakes of a better car loan are real. Vanguard's recent retirement outlook found that the median Baby Boomer is projected to face an annual shortfall of $9,000 in retirement, roughly a quarter of their expected expenses.³ This leaves most retirees significantly reliant on Social Security and highly sensitive to recurring monthly costs. A lower car payment isn't a small thing in that context. It's money that could shore up a retirement fund, cover a medical bill, or simply reduce the pressure of making a fixed income stretch.

Every generation has a reason to save on their car loan.

Whether it's Gen Z managing their first loan alongside student debt, Millennials stretched across childcare and eldercare, or Gen X or Baby Boomers heading into retirement on a fixed income, the math is the same: a lower monthly payment is money back in their budget, available for whatever matters most.

Auto loan debt grew by $43 billion in the last year, now reaching $1.69 trillion in the U.S., according to the latest data from The Federal Reserve Bank of New York.⁴ Auto loans are the second largest debt category behind mortgages, making it a growing burden on car owners navigating stretched budgets. Most borrowers have never once checked whether they could be paying less.

Caribou compares rates across a network of lending partners so drivers can see their real options in one place, in minutes, without affecting their credit score. The hardest part, for most people, has simply been starting. Drivers can take the first step to getting pre-qualified here.