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 better financial choices by providing you with interactive financial calculators and tools that provide objective and original content. This allows you to conduct research and compare information for free and help you make informed financial decisions. Bankrate has partnerships with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site come from companies that pay us. This compensation can affect the way and where products appear on this site, including for instance, the order in which they may be listed within the categories of listing and other categories, unless prohibited by law for our loan products, such as mortgages and home equity, and other home loan products. This compensation, however, does have no impact on the information we publish, or the reviews that appear on this website. We do not include the universe of companies or financial deals that might be open to you. Image Source/Getty Images
4 min read . Published 7 March 2023.
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the details of taking out loans to purchase an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances with concise, well-researched and clear facts that break down complex topics into manageable bites. The Bankrate guarantee
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How much is an amount for a down payment on a vehicle? One method to reduce the higher-than-usual vehicle costs creating high monthly costs is to deposit a . The term “down payment” refers to cash you have available or any value you get from your vehicle trade-in or from rebates. This will help you save money before your financing even begins and improve your standing with lenders. At minimum 20 percent of the cost of a brand new car, or 10 if you’re buying used. On average, during the quarter that ended in the fourth quarter of, drivers put down $6,780 for new and $3,921 for used as per . Those buying new vehicles paid 30 percent more than in the beginning of 2021. How much will my car loan be? The monthly average of car payments is determined by more than the cost of the vehicle. The amount you pay is determined by the amount you’re borrowing to finance that vehicle in order to pay the principal of your loan as well as your interest rate and loan duration. Average
New automobiles
Used cars
Monthly payment
$716
$526
The amount of the loan
$41,445
$27,786
Interest rate
6.07%
10.26%
A loan term
69.44 months
68.01 months
Monthly car payments, up to the point that the alternative data movement catch up, they serve as your DNA in the financial world, and provides lenders an indication of how risky it might be to take on. If you have a good credit score, you’re likely to receive more competitive rates. And for most, better rates will mean lower monthly costs. 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
601-660 (nonprime)
$753
$541
From 501 to 600 (subprime)
$746
$542
300-500 (deep subprime)
$700
$524
Average car loan amount Over the past year, vehicle prices have risen each month. The month of January, 2023 saw used cars cost on average $27,633 while new vehicles cost $49,388 — from a year ago. The higher prices indicate that motorists were taking out more money to finance their vehicles. Credit score
New cars
Used cars
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
From 501 to 600 (subprime)
$40,737
$23,636
300-500 (deep subprime)
$35,234
$20,325
Average auto loan rates The trick to finding the best rate available is to shop around with several lenders. Look into online lenders as well as more traditional options in banking prior to making a decision. Credit score
New cars
Used cars
Source: Experian State of Automotive Finance Market third quarter 2022
781-850 (super prime)
4.75%
5.99%
661-780 (prime)
5.82%
7.83%
601-660 (nonprime)
8.12%
12.08%
From 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 available in 12-month increments. The most commonly used terms are 24 to 60 months, however 72- and terms of 84 months are becoming more common. There is no 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
Used cars
Source: Experian State of Automotive Finance Market fourth quarter 2022
781-850 (super prime)
63.81
65.34
661 – 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 determine the cost of your car In addition to the monthly installment take into account any additional costs. These include common expenses like maintenance, insurance, and gas. However, you must also set aside funds for unexpected accidents — at least enough to cover your deductible. To calculate this number ahead of signing off on a new vehicle, you will have to come up with estimates. Starting with car maintenance using Edmunds’s method to calculate the average cost based on your car. Next, add that number to the expected insurance cost. Although not all states require it, the average motorist should be prepared to pay around $168 a month. Add your estimate of fuel costs. Calculate your car’s miles per gallon, and your estimated monthly mileage along with the average cost of fuel in your region to calculate this number. In addition, you should consider the registrationfees, fees, and taxes you’ll be required to pay, along with the . The bottom line: Although rates for car financing are affected by many things that are not your responsibility There are still alternatives you can take that put you in the driver’s seat when it comes to the purchase of a car. Take the time to compare various rates and increase your credit score to be eligible for more competitive rates. This is crucial as consumers will be met with high costs across the board during the coming year. These rates of interest will make monthly payments more expensive, so take your time and think about ways to cut costs in the .
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the details of borrowing money to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain confidence to control their finances through providing clear, well-researched facts that break down otherwise complex subjects into bite-sized pieces.
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