How Much Does a Car Loan Cost Each Month?

$10,000 Auto Loan

A $10,000 auto loan will cost $194.96 per month, assuming the average new car auto loan interest rate of 6.35% and a five-year term, according to fourth quarter (Q4) of 2024 data from Experian's State of the Automotive Finance Market report. However, you'd likely need a hefty down payment to secure such a low loan amount for a new vehicle.

If you're taking out a used car loan, you can generally expect a higher interest rate—an average of 11.62% according to Q4 Experian data—and, therefore, a higher monthly payment. If you can afford it, consider a shorter repayment period to minimize your interest charges.

$20,000 Auto Loan

A $20,000 auto loan will cost $389.92 per month, assuming the average new car auto loan interest rate of 6.35% and a five-year term. That's still well below the average new car loan payment of $742, according to Experian data.

With a used car, however, you're not far off from the $525 average payment for used car loans.

$30,000 Auto Loan

A $30,000 auto loan will cost $584.88 per month, assuming the average new car auto loan interest rate of 6.35% and a five-year term. At this point, however, you're paying nearly $80 more per month if you're buying a used car instead.

Depending on your budget, it could make sense to opt for a longer repayment term with a loan this size. However, it's important to note that longer terms often come with higher interest rates. You can also expect to pay more total interest charges over the life of the loan.

$40,000 Auto Loan

A $40,000 auto loan will cost $779.84 per month, assuming the average new car auto loan interest rate of 6.35% and a five-year term. That's higher than the $742 average payment for new car loans, which may be unaffordable for some without a longer repayment term.

For a used car loan, you can expect to pay over $100 per month more compared to a new car loan.

How to Get a Lower Monthly Payment

While these averages can give you a general sense of what you can expect to pay for a car loan each month, your interest rate will depend on your creditworthiness, how much you borrow, your repayment term and your down payment.

Regardless of how expensive the car is, here are some steps you can take to keep your monthly auto loan payment low:

• Improve your credit. Get free access to your Experian credit report and FICO^® Score^☉ to assess your credit health and find areas that need improvement. Potential options may include getting caught up on past-due payments and paying down high credit card balances. If you find inaccurate information, you have the right to file a dispute with the credit bureaus.
• Shop around. Getting preapproved with a handful of lenders allows you to compare interest rates, repayment terms, fees and other features. This can help ensure that you get the best possible deal.
• Put more money down. Experts recommend a down payment of 20% for new cars and 10% for used cars. However, making a larger down payment not only reduces how much you need to borrow but also can help you qualify for a better interest rate. You can use cash or even a trade-in as your down payment.
• Pay down other debts. Your debt-to-income ratio (DTI) is another important aspect of your creditworthiness, and the lower it is, the better. It's calculated by adding up your monthly debt payments and dividing the sum by your gross monthly income. So, if you eliminate credit card balances and smaller loans, you can lower your DTI and potentially qualify for a better interest rate.
• Choose a less expensive car model. While it may be tempting to get the latest model, it might not be worth it if it'll put a strain on your budget. Instead, consider buying a less expensive model or a used vehicle to keep your monthly payment low.
• Opt for a longer repayment term. Longer repayment terms translate to lower payments because your loan is spread out over a longer period of time. Keep in mind, though, that longer terms often come with higher interest rates. Even if you do qualify for the same rate, you'll end up paying more in interest.
• Negotiate the sales price. Whether or not you're financing your vehicle purchase, it's crucial to negotiate the price of the car you're buying. Take some time to research prices before you head to the dealership, get preapproved for a car loan and leverage your trade-in if you have one. It's also important to decline unnecessary dealer add-ons. If the dealer is aggressive, don't be afraid to walk away.

Tip: Experts recommend spending no more than 10% to 15% of your gross monthly income on transportation costs, including loan payment, insurance, fuel, maintenance and repairs. Use a car payment calculator to determine how much you can afford each month before agreeing to loan terms.

Car payment calculator

The Bottom Line

Your car loan payment is based on several factors, and estimating what you'd pay can help you evaluate a car's affordability with your budget. If you don't need a new vehicle urgently, consider taking steps to improve your credit, boost your savings and research other ways to qualify for a lower monthly payment.

Also, be sure to regularly monitor your credit, so you can track your progress and address potential issues as they arise.