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 decisions by providing you with interactive tools and financial calculators, publishing original and objective content. We also allow users to conduct research and analyze data for free to help you make sound financial decisions. 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 the site, such as, for example, the order in which they may appear within the listing categories in the event that they are not permitted by law. This applies to our mortgage, home equity and other products for home loans. However, this compensation will affect the information we publish, or the reviews 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/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 specializes in helping readers with the ways and pitfalls of borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping their readers to take control of their finances with clear, well-researched facts that break down complicated topics into bite-sized pieces. The Bankrate promises
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How much is a down payment on a car? One way to curb the more expensive than usual vehicle expenses that result in high monthly costs is to put down a . A down payment is the money you have or any value you get from your vehicle trade-in or rebates. It can save you cash before the financing begins and improve your standing with lenders. A is at minimum 20 percent of a new vehicle or 10, if you’re purchasing used. On average, in the quarter that ended in the fourth quarter of buyers paid $6,780 for new vehicles and $3,921 for second-hand ones according to . The buyers of new cars received 30 percent more in the beginning of 2021. What will my monthly car loan be? The average monthly car payment is dependent on more than the price of the car. The amount you pay is determined by the amount you’re financing the car in order to pay off the principal of your loan, along with your rates of interest and loan duration. 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
Average monthly car payments Until the alternative data movement catch up, serves to be your personal financial DNA and provides lenders an idea of how risky you could be to accept. When you’ve got a good credit score, you’re likely to be offered more competitive rates. For most, better rates will mean lower monthly costs. 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 to 500 (deep subprime)
$700
$524
Average auto loan amount over the last year, vehicle prices have risen each month. In January 2023, used vehicles were priced at an average of $27,633 compared to new cars, $49,388 -up from the previous year. The price increases indicate that people were borrowing more money to finance their vehicles. Credit score
New automobiles
Cars used
Source Experian State of Automotive Finance Market fourth quarter 2022
781 to 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
300-500 (deep subprime)
$35,234
$20,325
The average auto loan rates The trick to finding the best rate available is to shop around with various lenders. Look into online lenders as well as more traditional options in banking prior to making a decision. Credit score
New automobiles
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%
Between 501 and 600 (subprime)
10.79%
17.46%
300-500 (deep subprime)
13.42%
20.62%
Average auto loan terms Most auto loans are available in increments of 12 months. The most commonly used term is between 24 and 60 months, but 72- and terms of 84 months are becoming more popular. There isn’t a perfect term, but it’s more suited to your budget and needs. A lower monthly payment means lower costs but higher costs over the long run. Credit score
New cars
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 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 will cost you In addition to the monthly installment take into account any additional costs. These are the usual expenses such as maintenance, insurance, gas and. But you should also set aside funds for unforeseeable accidents , at minimum, enough to cover your deductible. To determine this amount ahead of signing off on the purchase of a new car you’ll need to estimate. Starting with car maintenance using Edmunds’s method to calculate the an average cost for your car. After that, add the number to expected insurance costs. While not every state has a requirement for it, the average driver should be prepared to pay about $168 per month. Then, add up the estimated cost of fuel. Use your car’s average miles per gallon and the estimated monthly mileage along with average fuel costs in your region to arrive at the number. Finally, factor in the registrationfees, fees, and taxes you’ll have to pay, along with the . The bottom line is that even though the available rates for vehicle financing depend on a myriad of things that are not your responsibility However, there are some options you can choose to be in control when it comes to the purchase of a car. Take the time to compare different rates and button up your credit score to qualify for better rates. This is especially important as consumers will face high costs across the board during the coming year. The current interest rates are likely to make monthly payments more expensive, so be patient and consider 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 to navigate the ways and pitfalls of borrowing money to buy cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to manage their finances by providing clear, well-researched details that cut complex topics into manageable bites.
Auto loans editor
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