Average auto loan payments: What to expect in 2023 Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by offering you interactive tools and financial calculators, publishing original and objective content. This allows users to conduct studies and compare data for no cost to help you make informed financial decisions. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this website are provided by companies who pay us. This compensation could affect how and where products appear on the site, such as such things as the order in which they may appear within the listing categories, except where prohibited by law. Our loan products, such as mortgages and home equity, and other products for home loans. This compensation, however, does have no impact on the content we publish or the reviews that you read on this site. We do not cover the vast array of companies or financial offers that may be open to you. Image Source: Getty Images
4 min read Published March 07, 2023
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers with the ins and outs of securely taking out loans to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping their readers gain the confidence to manage their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. The Bankrate promise
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We make sure that everything we publish ensures that everything we publish is accurate, objective and trustworthy. The loans reporters and editors focus on the things that consumers care about most — different types of lending options, the best rates, the best lenders, ways to repay debt, and many more. So you can feel confident when investing your money. Integrity of the editing
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There are money-related questions. Bankrate can help. Our experts have been helping you manage your money for over four decades. We strive to continuously provide our readers with the professional guidance and tools required to make it through life’s financial journey. Bankrate follows a strict standard of conduct, which means that you can be sure that our information is trustworthy and accurate. Our award-winning editors and reporters produce honest and reliable content to help you make the right financial decisions. The content we create by our editorial staff is objective, truthful and uninfluenced by our advertisers. We’re transparent about the ways we’re capable of bringing high-quality information, competitive rates and helpful tools to you , by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products and, services, or by you clicking on specific links on our website. So, this compensation can affect the way, location and in what order products appear in listing categories in the event that they are not permitted by law. This is the case for our mortgage, home equity and other products for home loans. Other factors, such as our own proprietary website rules and whether a product is available in your area or at your own personal credit score could also affect how and when products are featured on this site. While we strive to provide the most diverse selection of products, Bankrate does not include information about each credit or financial products or services. For many Americans the expense of is one of the most significant expenses to their wallets each month. This is not just home expenses. In the average, motorists are spending more than $700 or $500 monthly for used and brand new cars in the respective quarters, according to Experian’s fourth-quarter . Insurance costs on average $2,014 per year according to . This steep monthly charge is in addition to the increase everywhere from the supermarket to the mall. So while the cost you pay to keep your vehicle on the road is dependent on a number of factors that include your credit score, the type of vehicle you select and the loan duration — it is not a guarantee that will supply troubles and will add to the cost. So whether you have or are planning to take out your current loan it is essential to be aware of typical monthly payments and rates so you can feel confident that you are getting the best deal. Statistics on car payments The average monthly payment for new vehicles is $716. The average monthly car payment for used cars is $526. 39.5 percent of the vehicles that were financed during the quarter ending in the fourth quarter 2022, were new vehicles. 60.5 of the vehicles that were financed during the fourth quarter of 2022 were brand new vehicles. Of consumers purchasing new vehicles in 2022, 80.9 were able to fund their vehicle, as opposed to 85.3 per cent for 2021. Financing through credit unions accounted for nearly 30 percent of all auto loans during the same time. The average cost for insurance for cars is approximately $168 per month. New loan amounts are increasing by 4.04 per cent in the quarter ending in. The popularity of wagons and SUVs boosted their share of financing, which reached 60.7 percentage in 2022’s fourth quarter. Overall loan balances increased by 8.56 percent over the same time frame.
How much is the cost of a downpayment on a car? One option to cut down on the more expensive than usual vehicle expenses that result in costly monthly payments is to put down the amount of . The term “down payment” refers to money you have or any value you get from the trade-in of your vehicle or money from rebates. This will help you save money before your financing even starts and will help you build your credibility with lenders. At the minimum of 20 percent for the cost of a brand new car, or 10 if you’re buying used. On average, during the fourth quarter of 2022, buyers paid $6,780 for new and $3,921 for used, according to . The buyers of new cars were able to pay 30 percent more than in early 2021. What will my monthly car’s monthly payment be? The average monthly car payment is determined by more than the cost of the car. Your is based on how much you are borrowing to finance that vehicle in order to pay the principal of your loan and rates of interest and loan duration. Average
New automobiles
Used cars
Monthly payment
$716
$526
Loan amount
$41,445
$27,786
Interest rate
6.07%
10.26%
A loan term
69.44 months
68.01 months
Average monthly car payments Until the alternative data movement catches up, they serve to be your personal financial DNA and gives lenders an indication of how risky it might be to take on. When you’ve got a strong credit score, you’re likely to get offered higher rates that are competitive. For most, better rates translate to lower monthly installments. Credit score
New cars
Used cars
Source Experian State of Automotive Finance Market fourth quarter 2022
781 to 850 (super prime)
$683
$505
661-780 (prime)
$723
$519
601-660 (nonprime)
$753
$541
From 501 to 600 (subprime)
$746
$542
300-500 (deep subprime)
$700
$524
Average car loan amount Over the past year vehicle prices have increased each month. For January 20, 2023, pre-owned cars cost an average of $27,633 and new vehicles, $49,388 — up from one year ago. These higher price tags mean that motorists were taking out more cash to finance their vehicles. Credit score
New automobiles
Cars that are used
Source Experian State of Automotive Finance Market fourth quarter 2022
781 to 850 (super prime)
$37,783
$28,183
661-780 (prime)
$43,001
$29,405
601-660 (nonprime)
$44,140
$27,719
From 501 to 600 (subprime)
$40,737
$23,636
300-500 (deep subprime)
$35,234
$20,325
Auto loan rates The trick to finding the most affordable rate is to shop around with various lenders. Explore lenders online and other traditional options for banking before taking the final decision. Credit score
New automobiles
Cars that are used
Source Experian State of Automotive Finance Market third quarter 2022
781-850 (super prime)
4.75%
5.99%
661 to 780 (prime)
5.82%
7.83%
601-660 (nonprime)
8.12%
12.08%
From 501 to 600 (subprime)
10.79%
17.46%
300-500 (deep subprime)
13.42%
20.62%
Average auto loan terms Most auto loans are available in 12 month increments. The most popular term is between 24 and 60 months, however 72months and 84-month terms are becoming more frequent. There’s no one perfect term, and it is instead specific to your budget and requirements. A lower monthly payment means lower costs however, it will cost more over the long run. Credit score
New cars
Used cars
Source: Experian State of Automotive Finance Market fourth quarter 2022
781 to 850 (super prime)
63.81
65.34
661 – 780 (prime)
70.99
69.04
601 to 660 (nonprime)
74.48
69.03
501 to 600 (subprime)
74.02
66.58
300-500 (deep subprime)
73.01
62.95
How to calculate the cost of your car In addition to the monthly payment, account for additional costs. They include typical expenses like maintenance, insurance, and gas. But you should also set aside money for unforeseen incidents — at the very least enough to pay your deductible. To figure out this amount prior to of signing a contract for a new vehicle you’ll need to make some estimates. Beginning with maintenance on your vehicle, use Edmunds’s to factor costs in the average based on your car. Then, add that amount to expected insurance costs. Although not every state requires it, the typical driver should be prepared to pay approximately $168 per month. From there, add your estimated fuel costs. Calculate your car’s miles per gallon, and your estimated monthly mileage , along with the cost of fuel for your area to get this figure. In addition, you should consider the cost of registration, fees and taxes you’ll need to pay as well as the . The bottom line Although available rates for vehicle financing are influenced by a variety of variables that are beyond your control However, there are some alternatives you can take to put you in the driver’s seat when it comes to this big purchase. Take the time to compare various rates and increase your credit score to be eligible for better rates. This is particularly important since consumers will be met with higher costs all over the board during the next year. The current interest rates are likely to make monthly payments more expensive, so be patient and think about how you can save money over the course of a .
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the ways and pitfalls of borrowing money to purchase an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain confidence to manage their finances with precise, well-researched and well-written facts that break down otherwise complicated topics into digestible pieces.
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