Average auto loan payments: What to expect in 2023 Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by offering you interactive financial calculators and tools, publishing original and objective content. This allows users to conduct research and compare information 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 Make Money The deals that are displayed on this website are provided by companies that compensate us. This compensation may impact how and where products appear on this website, for example for instance, the order in which they may be listed within the categories of listing, except where prohibited by law. Our loans, mortgages,, and other home lending products. This compensation, however, does have no impact on the content we publish or the reviews you read on this site. We do not contain the vast array of companies or financial deals that might be available to you. Image Source: Getty Images
4 minutes read Read Published 7 March 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 with the ins and outs of securely borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are committed to helping readers to control their finances by providing clear, well-researched information that breaks down otherwise complicated subjects into digestible pieces. The Bankrate guarantee
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What is the price of a down payment on a vehicle? One way to curb the high-than-normal costs of a vehicle that create expensive monthly payments is to deposit the amount of . The term “down payment” refers to money you have and any value that is derived from your car trade-in or rebates. It can save you cash before the financing begins and boost your reputation with lenders. At the minimum of 20 percent for an all-new vehicle, or 10 if you’re purchasing used. On average, in the fourth quarter of 2022, the average price for a new car was $6,780 new and $3,921 for used according to . New car buyers received 30 percent more in the first quarter of 2021. How much will my car’s monthly payment be? The average monthly car payment is based on more than just the price of the car. Your is based on how much you’re borrowing to finance the vehicle in order to pay the loan’s principal, along with your rates of interest and loan time. 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%
Loan term
69.44 months
68.01 months
Average monthly car payments Until the movement to collect alternative data catch up, they serve to be your personal financial DNA and gives lenders an insight into how risky you could be to accept. When you’ve got a good credit score, you’re likely to be offered higher rates that are competitive. In general, higher rates will mean lower monthly costs. Credit score
New cars
Used cars
Source: Experian State of Automotive Finance Market fourth quarter 2022
781-850 (super prime)
$683
$505
661 to 780 (prime)
$723
$519
601 to 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 risen each month. In January 2023, used cars were priced at an average of $27,633 compared to new cars, $49,388 — up from the previous year. The higher prices indicate that motorists were taking out more cash to finance their vehicles. 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
Between 501 and 600 (subprime)
$40,737
$23,636
300 to 500 (deep subprime)
$35,234
$20,325
Auto loan rates The most effective way of finding the most affordable rate is to compare different lenders. Explore online lenders as well as more traditional options in banking prior to taking the final decision. Credit score
New automobiles
Used cars
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 to 660 (nonprime)
8.12%
12.08%
Between 501 and 600 (subprime)
10.79%
17.46%
300 to 500 (deep subprime)
13.42%
20.62%
Average auto loan terms Most auto loans are offered in increments of 12 months. The most commonly used terms are 24 to 60 months, however 72or terms of 84 months are becoming more popular. There’s no one best term and each one is tailored to your budget and needs. A lower monthly payment means lower costs, but a higher cost overall. Credit score
New automobiles
Cars that are used
Source: Experian State of Automotive Finance Market fourth quarter 2022
781-850 (super prime)
63.81
65.34
661 to 780 (prime)
70.99
69.04
601-660 (nonprime)
74.48
69.03
From 501 to 600 (subprime)
74.02
66.58
300 to 500 (deep subprime)
73.01
62.95
How to calculate the cost of your car In addition to the monthly payment be sure to factor in additional expenses. These are the usual expenses such as maintenance, insurance, gas and. But you should also set aside funds for unforeseeable incidents — at the very least enough to pay your deductible. To determine this amount ahead of signing off on a new vehicle you’ll need to make some estimates. Beginning with maintenance on your vehicle and Edmunds’s formula to figure out the average cost based on your vehicle. Next, add that number to the expected insurance cost. While not every state has a requirement for it, the average driver is expected to shell out around $168 a month. Add the estimated cost of fuel. Calculate your car’s miles per gallon, and your estimated monthly mileage along with average fuel costs in your region to calculate this figure. Also, consider the cost of registration, fees and taxes you’ll be required to pay, along with the . The bottom line is that even though the available rates for vehicle financing are influenced by a variety of factors outside of your control There are still choices you can make to be in control in the purchase of a car. Take the time to compare various rates and boost your credit score to be eligible for more competitive rates. This is especially important as consumers will be faced with high costs across the board in the coming year. Current interest rates will make monthly payments more costly, so be patient and think about how you can save money over the course of a .
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the details of taking out loans to purchase an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to manage their finances with precise, well-researched and well-written facts that break down otherwise complex topics into manageable bites.
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