Average auto loan payments: What to expect in 2023 Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by offering you interactive financial calculators and tools, publishing original and objective content, by enabling users to conduct studies and analyze data for free to help you make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that are advertised on this site come from companies that pay us. This compensation could affect how and where products appear on this website, for example such things as the order in which they appear in the listing categories and other categories, unless prohibited by law. This applies to our loan products, such as mortgages and home equity and other home loan products. But this compensation does not influence the content we publish or the reviews that you see on this site. We do not contain the universe 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 is a specialist in helping readers to navigate the details of borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping their readers feel confident to manage their finances with concise, well-researched and clear facts that break down complicated topics into bite-sized pieces. The Bankrate guarantee
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How much is a down payment for a car? One method to reduce the more expensive than usual vehicle expenses that result in expensive monthly payments is to deposit a . A down payment is the money you have, any value that comes from your car trade-in or from rebates. This will help you save money before financing begins and improve your standing with lenders. At minimum 20 percent of a new vehicle and 10 if buying used. On average, during the 4th quarter in 2022, buyers paid $6,780 for new vehicles and $3,921 for second-hand ones as per . Those buying new vehicles were able to pay 30 percent more than in the first quarter of 2021. What will my monthly car loan be? The monthly average of car payments is dependent on more than the cost of the vehicle. The amount you pay is determined by how much you are borrowing to finance that vehicle so that you can pay the principal of your loan and rates of interest and loan term. Average
New cars
Used cars
Monthly payment
$716
$526
The amount of the loan
$41,445
$27,786
Interest rate
6.07%
10.26%
Loan term
69.44 months
68.01 months
Monthly car payments, up to the point that the movement to collect alternative data catch up, serves as your DNA in the financial world and provides lenders an insight into how risky you could be to accept. If you have a solid credit score, you’re likely to be offered better rates. And for most, better rates translate to lower monthly installments. Credit score
New automobiles
Used cars
Source: Experian State of Automotive Finance Market fourth quarter 2022
781-850 (super prime)
$683
$505
661-780 (prime)
$723
$519
601 to 660 (nonprime)
$753
$541
501 to 600 (subprime)
$746
$542
300-500 (deep subprime)
$700
$524
Average car loan amount over the last year, vehicle prices have risen 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. The higher prices indicate that people were borrowing more cash to finance their cars. Credit score
New automobiles
Used cars
Source Experian State of Automotive Finance Market fourth quarter 2022
781-850 (super prime)
$37,783
$28,183
661 to 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 best rate available is to shop around with different lenders. Check out online lenders as well as more traditional options for banking before taking the final decision. Credit score
New cars
Cars that are used
Source: Experian State of Automotive Finance Market third quarter 2022
781 to 850 (super prime)
4.75%
5.99%
661 to 780 (prime)
5.82%
7.83%
601-660 (nonprime)
8.12%
12.08%
501 to 600 (subprime)
10.79%
17.46%
300-500 (deep subprime)
13.42%
20.62%
Average auto loan conditions Most auto loans are offered in increments of 12 months. The most commonly used terms are 24 to 60 months, however 72- and terms of 84 months are becoming more frequent. There is no ideal term, and it is instead specific to your needs and budget. A means lower monthly payments, but a higher cost all-in. Credit score
New automobiles
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
Between 501 and 600 (subprime)
74.02
66.58
300 to 500 (deep subprime)
73.01
62.95
How to calculate how much your car costs In addition to the monthly payment be sure to factor in additional expenses. These include common expenses like maintenance, insurance, gas and. You should also put aside money for unforeseen accidents — at least enough to pay your deductible. To calculate this number ahead of signing a contract for an all-new vehicle, you will have to come up with estimates. Beginning with maintenance on your vehicle, use Edmunds’s to factor costs in the average based on your vehicle. After that, add the number to expected insurance costs. Although not all states require it, the average driver will need to be able to cover around $168 a month. Then, add up your estimated fuel costs. Calculate your car’s miles per gallon, and your estimated monthly mileage , along with average fuel costs in your region to arrive at the number. In addition, you should consider the registrationfees, fees, and taxes you’ll need to pay as well as the . The bottom line: Although rates for car financing are affected by many things that are not your responsibility There are still choices you can make that put you in control when it comes to this major purchase. Take the time to compare various rates and increase your credit score to be eligible for more competitive rates. This is particularly important since consumers will be met with high costs across the board during the coming year. The current interest rates are likely to make monthly payments more expensive take your time and think about ways to cut costs in the .
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the details of taking out loans to purchase cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to control their finances by providing clear, well-researched details that cut otherwise complex topics into manageable bites.
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