The average monthly car loan payment in the U.S. reached $734 for new vehicles and $525 for used ones in the second quarter of 2024, as reported by Experian. Some sources, like the November 2024 Cox Automotive/Moody’s Analytics New-Vehicle Affordability Index, show even higher averages, with new car payments hitting $743 in October 2024.
While these figures provide a general benchmark, your actual car payment depends on various factors. Here’s what influences monthly car payments and how to calculate them.
Key Factors That Determine Your Monthly Car Payment
Loan Amount:
The amount you borrow is based on the car’s sale price, minus any down payment or trade-in value. This forms the principal portion of your payment.
Interest Rate (APR):
Lenders set your interest rate based on your credit score, income, and other financial factors. New cars often come with lower rates compared to used ones, and rates can vary significantly between lenders.
Car Type & Source:
Loans for used cars or private sales generally have higher interest rates compared to loans for new cars bought from dealerships.
Loan Term:
Loan terms range from 24 to 84 months. Longer terms reduce monthly payments but increase total interest paid over time.
How Monthly Payments Are Calculated
Your monthly car payment is determined by dividing the total loan amount (including interest) by the loan term. For example:
A $20,000 loan at a 9% interest rate for 36 months results in payments of $636 per month and total interest of $2,896.
The same loan stretched to 60 months lowers payments to $415 but increases total interest to $4,910.
Averages for 2024: New vs. Used Cars
Here’s how current market averages break down:
The average monthly car payments for new and used cars differ significantly. For new cars, the monthly payment averages $734, with a loan amount of $40,927, an interest rate of 6.84%, and an average loan term of 68.48 months. For used cars, the average monthly payment is $525, with a loan amount of $26,248, an interest rate of 12.01%, and a loan term of 67.41 months. The credit score also plays a key role in determining the monthly payment. For those with higher credit scores, interest rates tend to be lower, which results in more affordable payments.
Credit Tier New Car Payment Used Car Payment
When looking at the impact of credit score on car payments, the following breakdown shows how payments change across different credit tiers. For those in the Superprime credit range (781-850), the new car payment is $717 and the used car payment is $522. In the Prime range (661-780), new car payments rise to $742 and used car payments are $518. For those in the Nonprime range (601-660), new car payments increase to $765, and used car payments are $535. Lastly, in the Subprime range (501-600), the payment for new cars is $749, while used car payments are $536.
How to Estimate Your Car Payment
To better plan, use an auto loan calculator to input:
- Vehicle price
- Trade-in value
- Down payment
- Interest rate
- Loan term
This tool helps determine your ideal loan amount and monthly payment, ensuring it fits your budget. Experts recommend keeping car payments under 10% of your take-home pay.
By understanding these factors, you can make informed decisions, avoid unnecessary debt, and drive away with confidence.
Read More
VA Clothing Allowance 2024 Know the Payment Date and Amount Details!
Disability Benefits: Last Check Arriving on Wednesday, Dec. 11 for Those Living with Others
