
Sign up & start saving!
Get our weekly newsletter for the latest in money news, credit card offers + more ways to save
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Updated
The average monthly car payment continues to rise, as does the loan term borrowers are choosing. Find out what this means for your own car loan — and how your credit score affects how much you pay each month.
In mid 2019, the average monthly car payment was $550 for new vehicles and $392 for used vehicles, according to Experian’s State of the Automotive Finance Market Report.
However, how much you ultimately pay each month will depend on a variety of factors, including:
The average car loan looked something like this as of mid 2019:
New cars | Used cars | |
---|---|---|
Loan amount | $32,119 | $20,156 |
Interest rate | 6.27% | 10.07% |
Loan term | 69 months | 65 months |
Monthly payment | $550 | $392 |
Credit score | 717 | 656 |
But this doesn’t tell the whole story. Two people can have the same payment despite having car loans that look nothing alike.
For example, these loans have the same monthly payment of $595, but the interest paid is over $5,000 more on the second loan.
Loan amount | Loan term | APR | Monthly payment | Total interest paid |
---|---|---|---|---|
$20,000 | 3 years | 4.5% | $595 | $1,418 |
$28,000 | 5 years | 10% | $595 | $7,695 |
Your credit score will play a role in the interest rate you receive on your car loan. And since interest affects your monthly payment, borrowers with better credit scores will typically receive lower rates.
While it looks like people spend about the same amount per month on their car payments, your borrowing power will be impacted with a lower credit score.
There may only be a $30 difference between the average monthly payments for super prime and deep subprime borrowers, but the latter are paying significantly more toward interest.
Credit score | Average new car monthly payment | Average used car mothly payment |
---|---|---|
Super prime — 781 to 850 | $516 | $383 |
Prime — 661 to 780 | $559 | $384 |
Nonprime — 601 to 660 | $575 | $394 |
Subprime — 501 to 600 | $567 | $408 |
Deep subprime — 300 to 500 | $546 | $411 |
When you’re ready to shop for a car, it’s important to pay attention to car loan interest rates in addition to the loan term. You’ll be able to afford much more car for the same amount of money when you have a higher score.
The longer your loan term, the lower your monthly payment will be. But it comes with one major downside: You’ll pay more in interest in the long run.
Let’s take a look at an example:
Loan amount | APR | Loan term | Monthly payment | Interest paid |
---|---|---|---|---|
$15,000 | 7.7% | 3 years | $468 | $1,847 |
$15,000 | 7.7% | 5 years | $302 | $3,120 |
Choosing a shorter term might make your monthly payment higher, but you’ll pay significantly less in interest over the life of your loan. We recommend picking the shortest term that comes with repayments you can comfortably afford to make each month.
While the average monthly payment for a new car is around $550, this doesn’t mean you’ll necessarily end up spending that much each month. Buying a less expensive car, making a larger down payment, improving your credit score or extending your loan term are all ways to help lower the monthly burden on your wallet.
You can check out our guide to car loans to learn more about how it all works.
Earn flat rewards on all of your purchases.
The first Americans who put their mortgage into forbearance in 2020 may be just a few months away from the end of that relief. Here’s what you need to know if you’re one of them.
Biden took office on Wednesday, but interest rates didn’t seem to take much note. Here’s the outlook for the year ahead.
If we’re heading into a stock market bubble, you can take some steps to protect your investments.
Compare 6 lenders to find one that’s a good fit for your needs.
Most federal student loan borrowers now have eight more months of the interest-free payment freeze.Â
Capped rates and a variety of local lenders make it easy to shop for a loan.
Industry experts predict mortgage rates will move past 3% this year, but that doesn’t mean refinancing is off the table.
Is it time to refinance your FHA to a conventional loan?
A standard connection service that works with lenders that offer large loans.