• Wed. May 18th, 2022

Average Car Loan Payments: What to Expect

ByElla E. Kidwell

Jan 29, 2022

For many Americans, the cost of financing a vehicle can be one of the biggest hits to their wallet each month outside of housing costs. How much you have to pay to keep your car on the road depends on a number of factors ranging from current power issues, your credit score, the vehicle you choose and the term of your loan.

As an informed consumer and driver, it’s important to understand typical monthly payments and rates to make sure you’re getting the best deal.

Key Monthly Car Payment Statistics

  • The average monthly car payment for new cars are $609.
  • The average monthly car payment for used cars are $465.
  • 59.27 percent consumers financed used vehicles in the third quarter of 2021.
  • 40.73 percent consumers financed new vehicles in Q3 2021.
  • SUVs make up more than 56 percent of all new loans.

How much are the monthly car payments?

Average monthly car payments are based on more than the cost of the vehicle. Your expected monthly cost is based on the amount you borrow to finance this vehicle to pay off the loan principal, as well as your interest rate and loan term.

Medium New cars Used vehicles
Monthly payment $609 $465
Amount of the loan $37,280 $25,909
Interest rate 4.05% 7.98%
term of the loan 69.47 months 66.71 months

Source: Experian State of the automotive financing market Q3 2021

Average monthly car payments

Until the reciprocating movement of data catches up, your credit score serves as financial DNA and gives lenders an idea of ​​the risk you may be running. If you have a strong credit history, you’ll likely qualify for more competitive rates. And for the most part, better rates mean lower monthly payments.

Credit score New cars Used vehicles
781–850 $579 $439
661–780 $616 $457
601–660 $642 $483
501–600 $631 $486
300–500 $587 $476
Medium $611 $468

Source: Experian State of the automotive financing market Q3 2021

Average amount of car loan

Over the past year, the loan amount on new and used vehicles has increased year-over-year by 8.55% and 20.92%, respectively. This means that drivers were spending more money to finance their vehicles.

Credit score New cars Used vehicles
781–850 $33,915 $25,965
661–780 $38,896 $27,428
601–660 $39,310 $26,095
501–600 $35,092 $21,779
300–500 $29,952 $18,319
Medium $35,433 $23,917

Source: Experian State of the automotive financing market Q3 2021

Average car loan rates

The key to finding the best rate available is to shop around with different lenders. Check out online lenders as well as more traditional banking options before signing up for a loan.

Credit score New cars Used vehicles
781–850 2.58% 3.68%
661–780 3.64% 5.35%
601–660 6.32% 9.77%
501–600 9.92% 15.91%
300–500 12.99% 19.85%
Medium 7.09% 10.91%

Source: Experian State of the automotive financing market Q3 2021

Average duration of a car loan

Most car loans are available in 12 month installments. The most common terms are 24, 36, 48, 60, 72 and 84 months. There is no perfect term and it is rather specific to your budget and needs. A longer term means lower monthly payments, but a higher overall cost.

Credit score New cars Used vehicles
781–850 63.94 64.25
661–780 70.97 67.75
601–660 74.13 67.77
501–600 73.5 64.99
300–500 72.19 60.87
Medium 70.94 65.13

Source: Experian State of the automotive financing market Q3 2021

How to calculate the price of your car

After understanding the amount that will come out of your wallet each month to finance your car, you also need to consider the additional vehicle costs that are sure to arise. This may include refueling at the gas station, unforeseen accidents, insurance, vehicle maintenance and depreciation incurred when you leave the lot.

To calculate this number before signing a new vehicle, you will need to make some estimates.

  1. As soon as the vehicle is serviced, use The Edmunds Car Maintenance Calculator to take into account the average cost depending on your vehicle.
  2. Then add this number to expected insurance costs. Although not all states require it, the average driver should be prepared to pay around $140 per month.
  3. From there, add your estimated fuel costs. Use your car’s average MPG and your estimated monthly mileage along with the average fuel costs in your area to get this number.
  4. Finally, take into account the registration, fees and taxes you will have to pay, as well as the vehicle depreciation.

The bottom line

While the rates available for vehicle financing are affected by many factors beyond your control, there are still choices you can make to put yourself in control of that big purchase. Take the time to compare different prices and improve your credit score so you can benefit from more competitive rates. And as the pandemic continues to shaping the car buying process, you’ll have new trends to follow and even more online shopping opportunities.