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If you're in the market for a new or used vehicle but don't have the cash saved up to buy one outright, you're not alone. In the second quarter (Q2) of 2024, 80.11% of new car buyers and 35.84% of used car buyers financed their purchase. If you plan to do the same, you'll need to take a look at your budget before heading to the dealership to make sure it can accommodate a car payment.
As of Q2 2024, auto loan payments averaged $734 per month for new cars and $525 per month for used cars. You may pay more or less depending on several factors, including your credit profile, down payment amount, loan term and more. In this article, we'll examine Experian's State of the Automotive Finance Market report from Q2 2024 to explain the variables that can affect your monthly payment and other auto loan details.
| Auto Loan Averages by Category | ||
|---|---|---|
| Category | New Cars | Used Cars |
| Monthly payment | $734 | $525 |
| Loan amount | $40,927 | $26,248 |
| Interest rate | 6.84% | 12.01% |
| Loan term | 68.48 months | 67.41 months |
| Credit score | 753 | 689 |
Source: Experian data as of Q2 2024; VantageScore® 4.0 used
What Affects Your Car Payment
It's easy to look at the average monthly car payment and assume you would pay something similar. But the truth is, the amount you pay could look very different, depending on multiple factors, including:
- Loan amount: Generally, the more you borrow, the higher your monthly payment will be because you have more to repay. Opting for a less expensive vehicle or saving up for a sizable down payment can help reduce the amount you need to borrow.
- Interest rate: Loans with higher interest rates typically have higher monthly payments than loans with lower rates. Paying your bills on time, bringing past-due accounts current, reducing your debt load and applying for credit sparingly can help you build a strong credit profile, which can help you qualify for lower rates.
- Loan term: Shorter loan terms increase your monthly payments but decrease the total amount of interest you pay. Longer loan terms make monthly payments more affordable but increase the total interest you pay over the life of the loan.
- Credit scores: People with higher credit scores typically qualify for lower interest rates, which reduces monthly payment amounts. For example, the monthly payment for a $30,000 loan with a 48-month term and a 7% interest rate is $718.39, compared with $760.88 per month for the same loan with a 10% interest rate.
- Down payment: With a larger down payment, you can borrow less, which reduces your payments each month.
- Add-ons: Purchasing add-ons such as gap insurance or an extended warranty from the dealer and rolling the cost into your auto loan increases your monthly payments. Avoiding coverage you don't need will help you save.
Average Car Payment by Credit Score
The average new car payment in Q2 2024 came in at $734, while used car monthly payments averaged $525, according to Experian data. Despite higher interest rates on used car loans, used car buyers paid about $200 less each month compared to new car buyers with similar credit scores because they borrowed less.
Near prime borrowers with new car loans had the highest payments at $765 per month. Prime borrowers with used car loans had the lowest payments at $518 per month. Super prime and deep subprime borrowers with new car loans had almost identical monthly payments. Average rates for deep subprime borrowers are three times higher than those for super prime borrowers, but loan amounts are lower, resulting in similar monthly payments.
| Average Auto Loan Payment by Credit Score | ||
|---|---|---|
| Credit Score Range | New Car Monthly Payment | Used Car Monthly Payment |
| Super prime (781 - 850) | $717 | $522 |
| Prime (661 - 780) | $742 | $518 |
| Near prime (601 - 660) | $765 | $535 |
| Subprime (501 - 600) | $749 | $536 |
| Deep subprime (300 - 500) | $719 | $532 |
Source: Experian data as of Q2 2024; VantageScore 4.0 used
How to Calculate Your Monthly Car Payment
You won't know exactly what your monthly car payment will be until you have the vehicle's final sale price and receive approval for your loan. But with a few pieces of information, you can use our online car payment calculator to estimate your expected payment before you start shopping for a loan. Simply input the interest rate you think you'll receive, the car's purchase price and the loan term. Adjusting these variables can help you determine how much you can afford to spend so you can stick with vehicles that fit your budget when you start shopping.
More Car Loan Statistics
Average Interest Rate by Credit Score
The average interest rate was 6.84% for new car loans and 12.01% for used car loans in Q2 2024. However, these annual percentage rates (APRs) varied significantly by credit score. Unsurprisingly, borrowers with the highest credit scores qualified for the lowest average rates—whether buying a new or used vehicle. Average rates climbed steadily as credit scores decreased and topped out at 15.77% for deep subprime borrowers purchasing a new car and 21.55% for deep subprime borrowers purchasing a used car.
| Average Auto Loan Interest Rate by Credit Score | ||
|---|---|---|
| Credit Score Range | New Car APR | Used Car APR |
| Super prime (781 - 850) | 5.25% | 7.13% |
| Prime (661 - 780) | 6.87% | 9.36% |
| Near prime (601 - 660) | 9.83% | 13.92% |
| Subprime (501 - 600) | 13.18% | 18.86% |
| Deep subprime (300 - 500) | 15.77% | 21.55% |
Source: Experian, data as of Q2 2024; scores calculated using VantageScore 4.0
Average Loan Amount by Credit Score
New car buyers borrowed an average of $40,927, while used car buyers borrowed significantly less, with loan amounts averaging $26,248. Regardless of whether you're buying a new or used vehicle, reducing the amount you borrow results in lower monthly payments. You can decrease your loan amount by saving up for a large down payment, trading in or selling your current vehicle or purchasing a less expensive car.
| Average Auto Loan Amount by Credit Score | ||
|---|---|---|
| Credit Score Range | New Car Loan Amount | Used Car Loan Amount |
| Super prime (781 - 850) | $39,172 | $28,079 |
| Prime (661 - 780) | $42,993 | $27,594 |
| Near prime (601 - 660) | $42,467 | $25,238 |
| Subprime (501 - 600) | $38,045 | $21,918 |
| Deep subprime (300 - 500) | $33,917 | $19,950 |
Source: Experian data as of Q2 2024; VantageScore 4.0 used
Average Loan Term by Credit Score
Average loan terms for new and used car loans were similar at 68.48 months and 67.41 months, respectively. Deep subprime used car buyers have the shortest average loan term at 63.75 months and near prime new car buyers have the longest at 74.13 months.
The most significant difference in loan terms was between super prime and near prime borrowers who purchased new cars. Super prime borrowers paid off their loans nearly 10 months earlier, resulting in big-time savings on interest charges.
Longer terms can help bring down your monthly payment, but you'll pay more in interest over the life of the loan than you would by choosing a loan with a shorter term. Additionally, because vehicles depreciate so quickly, when you opt for a longer repayment term, you risk owning a car that's worth less than what you owe before you pay off the loan. While a shorter loan term will increase your monthly payment, you'll save on interest charges by paying it off sooner. And you're less likely to become upside down on your loan.
| Average Auto Loan Term by Credit Score | ||
|---|---|---|
| Credit Score Range | New Car Term (Months) | Used Car Term (Months) |
| Super prime (781 - 850) | 64.04 | 65.56 |
| Prime (661 - 780) | 71.41 | 68.63 |
| Near prime (601 - 660) | 74.13 | 68.27 |
| Subprime (501 - 600) | 73.39 | 66.44 |
| Deep subprime (300 - 500) | 72.24 | 63.75 |
Source: Experian data as of Q2 2024; VantageScore 4.0 used
The Bottom Line
Average car payments can provide some insight into what you might pay if you need to take out a loan to purchase a new or used vehicle. However, it's essential to understand that your monthly payment may be higher or lower depending on factors unique to your personal situation. If minimizing your car payment is a priority, consider choosing a less expensive vehicle, saving up for a larger down payment or improving your credit if it's not in great shape. If you don't know how your credit scores stack up, you can check your FICO® Score☉ for free anytime with Experian.
When you're ready to start looking for a new (or used) car, set aside time to shop for financing too. Getting multiple auto loan quotes from different lenders will help you find the lowest rate you can qualify for. Just be sure to get all your quotes within a two-week period to reduce the credit impact of your loan applications.
Applying for new credit generally drops your credit scores by a few points. However, when you're rate shopping for certain types of credit like auto loans, mortgages and personal loans, credit scoring models count all inquiries within a specific timeframe as one. Timelines vary based on the credit scoring model, but if you get all your quotes within a couple of weeks, it probably won't have a significant impact on your credit scores.