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 tools and financial calculators as well as publishing relevant and impartial content. This allows you to conduct research and analyze data for free and help you make financial decisions with confidence. Bankrate has agreements with issuers such as, 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 website are provided by companies that pay us. This compensation could affect how and when products are featured on the site, such as, for example, the order in which they may appear within the listing categories and other categories, unless prohibited by law for our loan products, such as mortgages and home equity, and other products for home loans. But this compensation does affect the content we publish or the reviews you see on this site. We do not contain the universe of companies or financial offerings that could be available to you. Image Source/Getty Images
4 min read . Published on March 7, 2023.
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ways and pitfalls of borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping their readers to take control of their finances by providing concise, well-researched and clear information that breaks down otherwise complex topics into manageable bites. The Bankrate promise
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They ensure that what we write ensures that everything we publish is accurate, objective and reliable. Our loans reporters and editors focus on the things that consumers care about the most -- the various kinds of loans available and the most competitive rates, the most reliable lenders, how to pay off debt and more . This means you can feel confident when making a decision about your investment. Editorial integrity
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You have money questions. Bankrate has the answers. Our experts have helped you understand your money for more than four decades. We continually strive to provide consumers with the expert advice and tools needed to be successful throughout their 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, reporters and editors provide honest and trustworthy content to help you make the best financial decisions. Our content produced by our editorial team is objective, factual, and not influenced from our advertising. We're transparent about how we are able to bring quality information, competitive rates and useful tools to our customers by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products and services, or when you click on certain links posted on our website. Therefore, this compensation may affect the way, location and when products are listed and categories, unless it is prohibited by law. We also offer mortgage or home equity products, as well as other products for home loans. Other factors, such as our own proprietary website rules and whether a product is available within the area you reside in or is within your own personal credit score can also impact how and where products appear on this site. We strive to provide a wide range offers, Bankrate does not include details about every credit or financial item or product. For many Americans, the cost to could be among the biggest hits to their budgets every month. This is not just home expenses. On average, motorists spend more than $700 and $500 each month for used and brand new cars, respectively, according to Experian's fourth quarter report . Insurance costs an average of $2,014 annually, according to . The high monthly cost is in addition to the increase everywhere from the supermarket to the shopping mall. Therefore, the cost you pay to keep your car on the road is contingent on many factors ranging from your credit score, the type of vehicle you select and the loan period -- they will continue to problems with supply and can increase the cost. Therefore, whether you've got or are looking to your current loan, it's important to understand typical monthly payments and rates to feel confident that you are getting the most value. Car payment statistics The median monthly payment for new automobiles is $716. The monthly average car payment for used cars is $526. 39.5 percent of the vehicles that were financed in 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 new vehicles. For those who bought new vehicles in 2022, 80.9 chose to finance their vehicle, versus 85.3 percentage of 2021. Credit union financing accounted for about 30 percent of auto loans during the same time. The average cost for car insurance is around 168 dollars per month. The latest loan amounts are rising 4.04 percent in the fourth quarter of 2022. SUVs and wagons increased financing share, hitting 60.7 percent during the 4th quarter in 2022. All-in loan balances increased 8.56 percent in the same period.
How much is a down payment on a car? One option to cut down on the higher-than-usual vehicle costs creating expensive monthly payments is to deposit a . Down payment refers to money you have or any value you get from the trade-in of your vehicle or money from rebates. It can save you money before financing starts and will help you build your credibility with lenders. It's at least 20 percent of an all-new vehicle, or 10 if you're purchasing used. On average, during the 4th quarter in 2022 buyers paid $6,780 for new vehicles and $3,921 for second-hand ones according to . Those buying new vehicles received 30 percent more in the beginning of 2021. How much will my car payment be? The average monthly car payment is dependent on more than the cost of the car. It is determined by the amount you're financing the car in order to pay the principal amount of the loan as well as your rates of interest and loan duration. Average
New automobiles
Cars that are used
Monthly payment
$716
$526
The amount of the loan
$41,445
$27,786
Rate of interest
6.07%
10.26%
A loan term
69.44 months
68.01 months
The average monthly payment for car loans, until the alternative data movement catches up, serves as your DNA in the financial world and gives lenders an insight into how risky you could be to accept. When you've got a strong credit score, you are likely to receive higher rates that are competitive. For most, better rates translate to lower monthly installments. Credit score
New automobiles
Cars that are used
Source Experian State of Automotive Finance Market fourth quarter 2022
781-850 (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 auto loan amount Over the past year vehicle prices have increased each month. In January 2023, used vehicles cost an average of $27,633 compared to new cars, $49,388 -up from one year ago. The higher prices indicate that people were borrowing more cash to finance their cars. Credit score
New cars
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 to 660 (nonprime)
$44,140
$27,719
501 to 600 (subprime)
$40,737
$23,636
300 to 500 (deep subprime)
$35,234
$20,325
Average auto loan rates The trick to finding the best rate available is to shop around with various lenders. Explore online lenders as well as more traditional options in banking prior to signing off. 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%
501 to 600 (subprime)
10.79%
17.46%
300-500 (deep subprime)
13.42%
20.62%
Average auto loan terms The majority of auto loans are offered in 12-month increments. The most popular terms are 24 to 60 months, however 72or 84-month terms are becoming more popular. There is no ideal term, but it's more suited to your needs and budget. A means lower monthly payments but higher costs 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
Between 501 and 600 (subprime)
74.02
66.58
300 to 500 (deep subprime)
73.01
62.95
How do you determine the cost of your car In addition to the monthly installment be sure to factor in additional expenses. These include common expenses like gas, insurance and maintenance. You should also put aside money for unforeseen incidents -- at the very least enough to pay your deductible. To calculate this number ahead of signing off on an all-new vehicle you'll need to come up with estimates. Beginning with maintenance on your vehicle and Edmunds's formula to figure out the costs in the average based on your vehicle. After that, add the number to expected insurance costs. While not every state has a requirement for it, the average motorist will need to be able to cover around $168 a month. Add your estimate of fuel costs. Take your car's average miles per gallon, and your estimated monthly mileage , along with average fuel costs in your region to calculate this figure. In addition, you should consider the cost of registration, fees and taxes you'll have to pay, along with the . The bottom line is that even though the available rates for car financing are affected by many variables that are beyond your control However, there are some choices you can make that put you in control when it comes to this big purchase. Take the time to compare different rates and button up your credit score in order to qualify for more competitive rates. This is particularly important since consumers will be faced with cost-of-living increases across all areas in the coming year. These rates of interest will make monthly payments more expensive, so be patient and think about how to save money in a .
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the details of taking out loans to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain confidence to take control of their finances with clear, well-researched details that cut complex topics into manageable bites.
Auto loans editor
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