What’s your state’s average car loan balance?

Geographical location isn’t a big factor influencing average car loan delinquency rates, interest rates and payments. Rather, they are determined by a driver’s credit score and history, income, debts and the loan amount and term. But when you break those stats down by location, you get a peek at the economic conditions in each state.

Over the past year, auto delinquency rates have been on the rise. They currently stand at the highest level since 1996, according to data from Fitch Ratings. This increase puts rates of delinquency back to pre-pandemic levels. One major trigger of borrowers becoming delinquent is higher interest rates caused by the Federal Reserve’s inflation-quelling moves.

As interest rates and delinquencies increase, find out how your home state is doing.

Car payment statistics

• The average monthly payment for new cars is $726, according to Experian.
• The average monthly payment for used cars is $533, according to Experian.
• New cars cost an average of $48,247, according to Cox Automotive.
• The average loan term for new cars is 68.26 months, according to Experian.
• The average loan rate for new cars is 7.03 percent, according to Experian.
• The average loan term for used cars is 67.57 months, according to Experian.
• The average loan rate for used cars is 11.35 percent, according to Experian.
• Drivers pay an average down payment of $4,111 for used vehicles, according to Edmunds.

States with the highest car loan balance

An auto loan balance is the remaining amount a driver has to pay on their loan. State average balances range from around $4,100 to upwards of $7,000.

The average car loan balance across the country is $5,470, according to the Federal Reserve. Below are the 10 states with the highest car loan balance in the country.

These higher balances are partly due to a few macro-environmental issues across the country and are not just state-specific. One major factor is the issue of supply versus demand. Although vehicle inventory has been increasing in the last few months, the number of units available in the country is still below pre-pandemic levels due to supply chain issues. This caused the cost of available cars to rise — forcing drivers to finance more.

Along with this, drivers have been choosing longer loan terms to lower the monthly cost of their car payments. Average used vehicle terms in the third quarter of 2023 reached 67.57 months. New vehicle terms told a similar story, with drivers financing for an average of 68.26 months.

Average car payment by state

Sources: iSeeCars and Edmunds

The average monthly payment figures for each state were calculated using a combination of the average used car price and interest rate for each state, along with the national average loan term. However, we didn’t factor in a down payment, which would reduce the monthly payment.

Loan terms typically last between 24 and 84 months. A few lenders even offer 96-month terms. A longer term lowers the monthly cost, but it leads to a higher cost overall.

The interest rate that you pay for your vehicle is based on a variety of factors, such as your credit, the vehicle type and the terms you choose. On average, drivers can expect to pay around 7.03 percent for new cars and 11.35 percent for used, according to the second quarter data from Experian. Below are the average APRs as of Jan. 3, 2024, based on a Bankrate study.

Average used car price by state

Source: iSeeCars

Due to remaining supply chain issues and limited inventory, vehicle prices hit record early this year last year. However, in recent months, new vehicle average transaction prices declined. September’s average was $47,899, down $360 from this time last year, according to Kelley Blue Book.

Used vehicle prices, on the other hand, are up since last year but have remained below $27,000, according to Cox Automotive. Used vehicle inventory and days’ supply are tighter year over year as of October, which can mean higher prices ahead.

SUVs remain the most popular vehicle type, surpassing 60 percent of financed vehicles in the third quarter of 2023, according to Experian.

Car loan delinquency by state

Source: The Federal Reserve

Texas has the highest average car loan balance but the 13th highest average delinquency at 4.47 percent. Mississippi leads with 6.10, notably higher than the other national averages displayed above.

TransUnion research finds that consumers prioritize making payments on their cars almost as much as they do making mortgage payments. Borrowers put vehicle payments ahead of credit card payments. It makes sense: Your vehicle is likely among your most valuable assets, and thus, you’re likely highly motivated to avoid repossession.

When it comes to prioritizing your payment, the key is preparedness. To do this, you must only finance what you can afford. The best way to do this is to calculate your monthly payment and your loan’s lifetime interest, then compare it with your budget.

States with the lowest car loan balance

Source: The Federal Reserve

Hawaii takes the gold medal for lowest average auto loan balance, followed closely by the home of the Mayflower, Massachusetts. These states carry averages dramatically lower than the national average of $5,470. But as explained, the auto loan balance is independent of ZIP code and rather relates to the economic circumstances of residents.

Financial literacy, income and cost of living all play important roles. When looking at the states with the lowest balances, for example, three out of the five hold some of the highest median household incomes in the country, according to the Census Bureau. Average credit scores also tend to be higher in these states.

Hawaii’s average FICO score is 732, falling under the good category, according to Experian. That’s higher than the national average credit score of 714. The remaining states carry similarly high averages.