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 second-quarter automotive finance report. Insurance costs an average of $2,014 per year, according to Bankrate data.

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

Car Outline
  • The average monthly car payment for new cars is $729.
  • The average monthly car payment for used cars is $528.
  • 40.72 percent of vehicles financed in the second quarter of 2023 were new vehicles.
  • 59.28 of percent of vehicles financed in the second quarter of 2023 were used vehicles.
  • Of consumers purchasing new vehicles in 2023, 79.70 chose to finance their vehicle, versus 83.49 percent in 2022.
  • Credit union financing made up 24.98 percent of all auto loans during the same period.
  • The average cost of car insurance is about $168 per month.
  • New loan amounts are up only 0.2 percent in the second quarter of 2023.
  • SUVs and wagons increased financing share, hitting 60.87 percent of new vehicles financed in the second quarter of 2023.
  • Overall loan balances grew 6.50 percent in the same period.

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 $729 $528
Loan amount $40,657 $26,863
Interest rate 6.63% 11.38%
Loan term 68.12 months 67.42 months

Source: Experian State of Automotive Finance Market second quarter 2023

Average monthly car payments

Your credit score gives lenders an idea of how risky you might be to take on. If you have a strong credit history, you are likely to be offered more competitive rates. And better rates mean lower monthly payments.

Average auto loan amount

In late 2023, vehicle price growth is almost flat. In fact, used car prices dropped slightly between June and August. In August 2023, used vehicles cost an average of $26,651 and new vehicles, $48,451.

Credit score New cars Used cars
781 to 850 (super prime) $36,663 $27,303
661 to 780 (prime) $42,428 $28,402
601 to 660 (nonprime) $43,807 $26,527
501 to 600 (subprime) $40,746 $23,065
300 to 500 (deep subprime) $36,690 $19,912

Source: Experian State of Automotive Finance Market second quarter 2023

Average auto loan rates

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

Credit score New cars Used cars
781 to 850 (super prime) 5.07% 7.09%
661 to 780 (prime) 6.44% 9.06%
601 to 660 (nonprime) 8.99% 13.49%
501 to 600 (subprime) 11.72% 18.49%
300 to 500 (deep subprime) 14.18% 21.38%

Source: Experian State of Automotive Finance Market second quarter 2023

Average auto loan terms

Auto loans are available in 12-month increments, ranging from 24 to 96 months. The most common terms are 60 and 72 months, but 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
781 to 850 (super prime) 61.60 months 64.70 months
661 to 780 (prime) 70.15 months 68.41 months
601 to 660 (nonprime) 74.20 months 68.34 months
501 to 600 (subprime) 73.80 months 66.27 months
300 to 500 (deep subprime) 72.79 months 62.85 months

Source: Experian State of Automotive Finance Market second quarter 2023

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 before signing off on a new vehicle, you must make some estimates.

  1. Starting with vehicle maintenance, use Edmunds’s car maintenance calculator to factor in the 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 $168 a month.
  3. From there, add your estimated fuel costs. Use your car’s average miles per gallon, your estimated monthly mileage, and 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.

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 from rebates. It will save you money before your financing even begins and make you more appealing to lenders.

A good down payment is at least 20 percent of a new vehicle, or 10 if you’re buying used. On average, in the second quarter of 2023, drivers put down $6,823 for new and $4,107 for used, according to Edmunds.

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.

Current interest rates will make monthly payments more expensive, so be patient. Take the time to compare different rates and button up your credit score to qualify for more competitive rates.