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If you're in the market for a used car, there's a good chance you'll choose to take out an auto loan. Roughly 42% of used vehicles are financed, according to Experian's State of the Automotive Finance Market report from the second quarter (Q2) of 2024. The average used car payment in 2024 is $525, which is more than $100 cheaper than the average new car payment.
While used car loans have a higher average interest rate than new car loans, average loan amounts, repayment terms and credit scores of loan holders tend to be lower. Below is a side-by-side comparison of new and used car financing details. It can give you a quick idea of what you can expect when car shopping. Of course, your total costs will depend on which vehicle you're financing as well as your personal financial situation.
| 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 months | 67 months |
| Credit score | 753 | 689 |
Source: Experian data as of Q2 2024; VantageScore® 4.0 used
Average Used Car Payment by Credit Score
Buying a car is a big financial decision. Your credit score can impact your ability to be approved for the loan and the interest rate you'll be offered. A strong score shows lenders that you're a trustworthy borrower who's managed credit responsibly in the past. That can improve your chances of qualifying for a competitive interest rate on an auto loan—and translate to an affordable monthly payment. Unfortunately, a lower credit score could set the stage for a higher interest rate (and car payment).
| Average Car 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
What Affects Your Car Payment
Several factors will determine your monthly car payment. Understanding how they work can help you secure a payment that's compatible with your budget. If you're financing a used car, consider the following:
- Down payment: The more money you put down, the less you'll need to finance. Trading in your old vehicle can also reduce your total loan amount. That will likely translate to a lower monthly payment. For a used car, making a down payment of at least 10% is a good goal.
- Loan amount: Qualifying for a large loan amount doesn't necessarily mean you should borrow that much. The larger your loan, the more you'll have to repay and the higher your monthly payments will be. The total loan amount includes the vehicle price, taxes, fees and any extra add-ons you opt for—and interest on a large loan can add up fast.
- Interest rate: This is what the lender charges you to borrow money for your used car. Interest rates on auto loans are determined in part by your credit. A healthy credit score suggests to a lender that you're more likely to make your monthly payments on time and pay off your loan as promised. A lower score could be a red flag to lenders, and will likely result in a higher interest rate.
- Repayment term: This is how long it will take to pay off your auto loan. A longer repayment term will result in a lower monthly payment, and vice versa. But stretching out the term means paying more interest over the life of the loan.
Calculate Your Monthly Car Payment
When shopping around for a used car, you'll want to make sure you can afford your new monthly payment. Enter Experian's car payment calculator. Simply enter the following information to see your monthly payment:
- Loan amount
- Loan term
- Interest rate
The calculator will also churn out your payoff date and the total amount you'll pay in interest. This information can come in handy when you're comparing cars and auto loans. You can enter different financing options to see your total out-of-pocket costs.
More Used Car Loan Statistics
Your credit score helps lenders determine how risky it is to lend you money. A lower score can result in a higher interest rate and lower borrowing limit. The good news is that the opposite is also true: Taking steps to improve your credit could help you save money in the long run. Here's a closer look at how your credit score may affect your auto loan.
Average APR by Credit Score
The average used loan interest rate is 12.01%. Good credit (also called prime credit) or better can result in a borrower getting a rate that's at or near the lowest available interest rate for an auto loan. Subprime borrowers, on the other hand, tend to have fewer options and less favorable rates. In some cases, that could result in a rate that's over 21% for a used vehicle.
| 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; VantageScore 4.0 used
Average Loan Amount by Credit Score
Loan amounts vary depending on your credit score and whether you're buying a new or used car. The average used car loan amount in 2024 is $26,248. That number jumps to $40,927 for a new car. If your loan amount is on the higher side, you can expect a larger monthly payment. You can reduce how much you need to finance by saving up for a larger down payment, trading in an older vehicle or looking for a more affordable 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
A longer loan term can be tempting, especially if it results in a low monthly payment, but it will increase your total borrowing costs. Let's say you're taking out a $26,000 auto loan with a 12% interest rate. Using the calculator above, that results in the following monthly payments for various loan terms:
- A 48-month term results in a monthly payment of $685. Overall, you'll pay $6,865 in interest.
- A 60-month term results in a monthly payment of $578. You'll pay $8,701 in total interest.
- A 72-month term results in a monthly payment of $508. You'll pay $10,598 in interest by the time you pay off the loan.
The average loan term for a used car loan in 2024 is 67 months.
| Average Auto Loan Term by Credit Score | ||
|---|---|---|
| Credit Score Range | New Car Term | Used Car Term |
| Super prime (781 - 850) | 64 months | 66 months |
| Prime (661 - 780) | 71 months | 69 months |
| Near prime (601 - 660) | 74 months | 68 months |
| Subprime (501 - 600) | 73 months | 66 months |
| Deep subprime (300 - 500) | 72 months | 64 months |
Source: Experian data as of Q2 2024; VantageScore 4.0 used
Tips to Get the Best Loan for a Used Car
Here are some simple steps to help you find a used car loan that works for your budget. Consider adding these action items to your list:
- Check your credit. You can access your credit report and FICO® Score☉ for free with Experian. If your score could use a little work, be intentional about making on-time payments and reducing your credit usage. You also have the right to dispute any inaccurately reported credit report information that may be dragging down your score. Taking these steps could help improve your credit score—and help you qualify for a car loan with a favorable interest rate and term.
- Clarify your budget. How much money can you put toward your down payment? Also think about your target monthly payment range. Researching average used car prices can help you set your budget. Check out local dealer prices and websites such as Edmunds and Kelley Blue Book.
- Make adjustments as needed. You might tweak your expectations based on your budget. That might mean going with a more affordable car, or pausing your car search while you improve your credit or saving up for a larger down payment.
- Compare lenders. Interest rates and loan terms can vary from one lender to the next. Start by getting preapproved for an auto loan from several lenders. This allows you to compare loan amounts, terms and rates—and then choose the best one for you. Getting preapproved for several loans within a two-week period should result in just a single hard inquiry being added to your credit file.
The Bottom Line
When researching used cars and auto loans, your monthly payment will probably be an important factor. The amount you pay will depend largely on your down payment amount, loan term and interest rate. These things can vary widely, so it's wise to shop around and compare lenders. If all goes well, you'll find a car you love and an auto loan that makes sense for your budget.