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How much is a car payment per month?

Matthew Levy Updated: June 27, 2023 • 4 min read

Manufacturing closures and supply chain difficulties caused by the Covid-19 pandemic occurred throughout the world, decreasing vehicle supply even as demand quickly rebounded. This has resulted in a price increase in both the new and used car markets. And, given the current high inflationary pressures, prices are unlikely to fall.

As the cost of financing a car is determined by a variety of factors, including current supply constraints, credit score, vehicle type, and loan length, it's vital for consumers to grasp the current market conditions, including average pricing, normal monthly payments, and other rates to make the best judgments and find the greatest offers.

What is the average car payment?

Vehicle prices have been rising tremendously recently. New car and truck costs are up 12.2% year-on-year, while used car prices are up 40.5%. In the United States, the average consumer borrows $39,721 for new cars and $27,291 for used cars.

As a result, the average payment for new vehicles has risen to $644, a double-digit increase over the previous year: the increases are 11.8% for new cars, 18.2% for used cars, and 15.4% for leased cars, respectively, bringing the average monthly payments to $644, $488, and $531.

Here are some key figures:

  • New car payment: $648/month (on average).
  • Used car payment: $503/month (on average).
  • 41.02% of buyers financed new vehicles (Q1 2022).
  • 58.98% of consumers financed used vehicles (Q1 2022).
  • SUVs account for more than 60% of all new car loans.

It is also important to note that credit score also has an impact on the average car payment.

The average car loan interest rate

The credit score determines the interest rate that can be expected (the lower the credit score, the higher the interest rate).

The following table shows the average interest rates for auto loans based on credit score.

Credit score New cars Used cars
781–850 2.40% 3.71%
661–780 3.56% 5.58%
601–660 6.70% 10.48%
501–600 10.87% 17.29%
300–500 14.76% 20.99%
Average 7.67% 11.61%

The interest rate is also affected by the loan's term. In general, the longer the term, the higher the interest rate.

Loan term New cars Used cars
36-month 3.86% 4.18%
48-month 3.93% 4.22%
60-month 4.03% 4.17%
72-month 4.12% 4.07%

What is the average car insurance payment?

According to Quadrant Information Services, full-coverage auto insurance costs an average of $1,771 per year or about $148 per month. Minimum coverage costs $545 per year on average.

The type of car has a considerable influence on the price of auto insurance - The cost of components and labor, the statistical likelihood of accidents, and the vehicle's safety and collision avoidance features can all have an impact on the premium.

  • APR: 4.67-23.80%
  • Loan Term: 24-84 months
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  • APR: 5.29-21.99%
  • Loan Term: 24-96 Months
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  • APR: 5.99-28.55%
  • Loan Term: 24-80 months
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How to calculate how much your car costs

Extra costs must be considered in addition to the monthly payment. These costs mainly include gasoline, insurance, and maintenance. However, drivers should also set money aside, at the very least enough to meet their deductible in case of an unexpected accident.

Calculating how much a car cost as a whole necessitates some guesswork.

However, there is a basic formula: Monthly payment + insurance costs + gasoline costs + average maintenance costs + registration, fees, and other obligatory taxes.

Depreciation of the vehicle is another issue to consider, but it is not a direct expense. Most automobiles depreciate in value over time.

What is the average down payment on a car?

According to recent data, the average down payment on a new car in the first quarter of this year surpassed $6,000 for the first time ever. In the first quarter of 2021, the average down payment for a used car was $3,574, up 7% from the previous quarter. The average down payment on a new car has increased by 27% year over year to $6,026.

How long should a car loan be?

Over the last decade, the average length of a new car loan has progressively increased. It is now 69.7 months, or nearly six years, for new autos. Used automobile loans, although being substantially shorter on average, come in second at 67.4 months.

The classic rule of thumb is to put down 20%, acquire a loan for no more than four years, and keep the entire monthly automobile budget to no more than 10% of one’s take-home earnings. However, given the current prices of new and secondhand cars, this rule is often disregarded. A 60-month loan duration is now commonly advised.


Over the course of the past several years, there has been a significant rise in the prices of new and used automobiles. In today's world, if you want to keep some money in your wallet, you have to be aware of the circumstances. Even though the interest rates that are offered for auto finance are determined by a number of factors that are outside of your control, there are still decisions that you can make that will enable you to exert some influence over this significant purchase.

Therefore, it is essential to take the time to analyze the many rates offers that are available, as well as work to improve your credit rating in order to become eligible for more favorable rates.



What is a good APR for a car?

Your APR will be mainly determined by your credit score. For instance, vehicle buyers with great credit scores of 781 to 850 were able to get new vehicle loans at an average APR of 2.4%. Buyers with credit scores between 300 and 500, on the other hand, witnessed average rates of 14.76% (see table above). Then, you should examine different loan offers depending on the average rate for your credit score category. Once you've narrowed down your lender options, you may also be able to negotiate a variety of rates and terms, or you may be able to lower your APR by making a larger down payment or increasing your credit score before applying for a loan.

How much is too much for a car payment?

Usually, a car payment is too high if it exceeds 30% of your total income. Also, keep in mind that the car payment is not the only expense incurred by the car; many additional costs are added. Average-wise, the monthly payment for a new vehicle is $644. Therefore, you can also use this figure to estimate if you are paying too much.

Is it better to lease or finance a car?

Both have their benefits and drawbacks. Lease payments are generally lower than finance payments because you only pay for a set value over a period of time, based on your usage. However, unlike financing, where you are the sole owner of the vehicle, you do not own the car in case of a lease; the dealer does.

What is a good interest rate for a car for 72 months?

For a 72-month loan, the average interest rate on a new car is 4.12%. You can use this number to see if your lender is offering you a good deal (or not).

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Written by Matthew Levy

Matthew is a freelance financial copywriter with 14+ years in financial services. He holds a Bachelor of Science degree in Economics with business and finance options and is a CFA Charterholder. He is from Vancouver, Canada, but writes from all over the world.