For many Americans, the cost to finance a vehicle can be one of the biggest hits to their wallets each month outside of housing costs. On average, drivers are spending over $700 and $500 each month for new and used vehicles, respectively, according to Experian’s third quarter automotive finance report. Insurance cost an average of $1,771 per year, according to Bankrate data.

This steep monthly charge comes on top of recession-based increases everywhere from the grocery store to the shopping mall. So while the amount you pay to keep your car on the road is dependent on a number of factors ranging from your credit score, the vehicle you choose and your loan term — ongoing supply troubles and high interest rates will increase the cost.

So whether you have poor credit or are looking to refinance your current loan, it’s important to understand typical monthly payments and rates so you can feel confident that you are getting the best deal.

Car payment statistics

Auto Car
  • The average monthly car payment for new cars is $700.
  • The average monthly car payment for used cars is $525.
  • 38.32 percent of consumers financed new vehicles in the third quarter of 2022.
  • 61.68 percent of consumers financed used vehicles in the third quarter of 2022.
  • Credit union financing made up over 30 percent of all auto loans during the same period.
  • The average cost of car insurance is about $148 per month.
  • New loan amounts are up 10 percent in the third quarter of 2022.
  • SUVs and wagons increased financing share, hitting 60.4 percent in the third quarter of 2022.
  • Overall loan balances grew 7.6 percent in the same period.
  • Long-term loans between 73 and 84 months are up compared to 2021.

How much is a down payment on a car?

One way to curb the higher-than-usual vehicle costs creating expensive monthly payments is to put down a sizable down payment. A down payment is the cash you have available, any value that comes from your vehicle trade-in or money incurred from rebates. Not only will it save you some money before your financing even begins but also boost your reputation with lenders.

A good down payment is at least 20 percent of a new vehicle and 10 if you’re buying used. On average in the third of 2022, drivers put down $6,453 for new and $3,700 for used, according to Edmunds. Those buying new vehicles paid 30 percent more than in early 2021.

How much will my car payment be?

Average monthly car payments are based on more than just the cost of the vehicle. Your expected monthly cost is based on how much you are borrowing to finance that vehicle in order to pay off the loan’s principal, along with your interest rate and loan term.

Average New cars Used cars
Monthly payment $700 $525
Loan amount $41,665 $28,506
Interest rate 5.16% 9.34%
Loan term 69.73 68.08

Average monthly car payments

Until the alternative data movement catches up, your credit score serves as your financial DNA and gives lenders an idea of how risky you might be to take on. If you have a strong credit history, you are likely to get offered more competitive rates. And for most, better rates mean lower monthly payments.

Credit score New cars Used cars
Source: Experian State of Automotive Finance Market third quarter 2022
781 to 850 (super prime) $668 $499
661 to 780 (prime) $706 $518
601 to 660 (nonprime) $739 $541
501 to 600 (subprime) $733 $543
300 to 500 (deep subprime) $690 $524

Average auto loan amount

Over the past year vehicle prices have increased each month. In November 2022, new vehicle prices set a record costing $46,681 — up $2,250 from a year ago. These higher price tags mean that drivers were taking out more money to finance their vehicles.

Credit score New cars Used cars
Source: Experian State of Automotive Finance Market third quarter 2022
781 to 850 (super prime) $37,912 $28,702
661 to 780 (prime) $43,183 $30,222
601 to 660 (nonprime) $44,530 $28,594
501 to 600 (subprime) $40,946 $24,216
300 to 500 (deep subprime) $35,301 $20,480

Average auto loan rates

The key to finding the best rate available is to shop around with different lenders. Check out online lenders along with more traditional banking options before signing off on a loan.

Credit score New cars Used cars
Source: Experian State of Automotive Finance Market third quarter 2022
781 to 850 (super prime) 3.84% 3.69%
661 to 780 (prime) 4.9% 5.47%
601 to 660 (nonprime) 7.25% 9.81%
501 to 600 (subprime) 10.11% 15.86%
300 to 500 (deep subprime) 12.93% 19.81%

Average auto loan terms

Most auto loans are available in 12-month increments. The most common terms are 24 to 60 months, but 72- and 84-month terms are becoming more common. There is no perfect term, and it is instead specific to your budget and needs. A longer-term means lower monthly payments, but a higher cost overall.

Credit score New cars Used cars
Source: Experian State of Automotive Finance Market third quarter 2022
781 to 850 (super prime) 64.14 65.47
661 to 780 (prime) 71.25 69.14
601 to 660 (nonprime) 74.73 69.06
501 to 600 (subprime) 74.25 66.51
300 to 500 (deep subprime) 72.79 62.68

How to calculate how much your car costs

In addition to the monthly payment, account for additional costs. These include common expenses like gas, insurance and maintenance. But you should also set aside money for unforeseen accidents — at least enough to cover your deductible.

To calculate this number ahead of signing off on a new vehicle you will have to make some estimates.

  1. Starting with vehicle maintenance, use Edmunds’s car maintenance calculator to factor average cost based on your vehicle.
  2. Next, add that number to expected insurance costs. Although not every state requires it, the average driver should be prepared to pay around $140 a month.
  3. From there, add your estimated fuel costs. Use your car’s average miles per gallon and your estimated monthly mileage along with average fuel costs in your area to get this number.
  4. Finally, factor in the registration, fees and taxes you’ll have to pay, along with the vehicle depreciation.

The bottom line

Although available rates for vehicle financing are affected by many factors outside of your control, there still are choices you can make to put you in the driver’s seat when it comes to this big purchase.

Take the time to compare different rates and button up your credit score so you can qualify for more competitive rates. This is especially important as consumers will be met with high costs across the board in the coming year. Current interest rates will make monthly payments more expensive so be patient and consider how to save money in a high-cost environment.