- The Average Monthly Payment for New Cars Is $644
- 56% of Loans Are Used to Buy SUVs
- Average New Car Loan Interest Rates Are 3.86%
- New Car Costs Average $38,948
- The Average Monthly Payment for Used Cars Is $488
- There’s Currently $1.2 Trillion in Outstanding Auto Loans
- The Average Financing Term Is Roughly 70 Months
- Car Loans Make Up 9% of Consumer Debt
- Used Car Costs Averages $8,244
Average Monthly Car Payment Statistics 2022-2021
Average Monthly Car Payment Statistics 2022-2021
The average monthly loan payment for new cars can get pretty expensive at an average of $644. This places the affordability of modern new car loans at the same level as rent or a mortgage, making it a much more expensive expenditure than it used to be. Of course, this is just an average, so it’s possible to purchase a cheaper new car model for less, but overall, car purchases will end up costing more than they did in the past, which might not be feasible for many and end up hurting sales of car manufacturers.
Although people continue to purchase a large number of trucks and light cars, SUVs form the largest category of vehicle purchases at 56%. SUVs are quickly becoming a favorite for many buyers because they’re more versatile in general, being able to sustain off-roading and long trips better than smaller vehicles, but having more enclosed space for people and personal items than trucks. SUVs also tend to have a lot of added on features like advanced sound systems, rear-view cameras, highly engineered seats, V8 engines, and Bluetooth technology, which end up increasing their cost overall; potentially explaining why average vehicle costs have increased over time.
The average interest rate for new car loans stands at 3.86%, which is considerably lower than it has been in much of the past. Loan rates will vary tremendously based on the institution a loan is taken from, the type of vehicle being purchased, and a borrower’s creditworthiness, but the generally low interest rate of most auto loans suggests that financial institutions and the Federal Reserve are trying to increase the number of people borrowing by quite a lot. Assuming buyers are in solid financial shape, the current environment is perfect for taking out a car loan. https://www.nerdwallet.com/article/loans/auto-loans/average-monthly-car-payment
The price of new cars has increased significantly since the 2008 financial crisis and as a result, the amount of money people need to be loaned for a vehicle has risen. However, much of this price increase has been tempered by the fact that over the past decade interest rates have decreased by about 40%. Overall, this means that while the actual loan on a car costs less proportionally (less interest), purchasing a new vehicle period is going to cost more than it used to.
Used cars are almost always less costly than new ones and that can usually be reflected in the monthly rate of most auto loans. Currently, the average monthly payment for people who take out a used car loan stands at $488 dollars. Due to the effect depreciation has on car values, it can be difficult to assess what people pay for a car on a case-by-case basis, but the generally low rate of $488 per month suggests there are a lot of affordable models out there.
The auto loan industry is absolutely massive with there being $1.2 trillion worth of outstanding loans in the United States. Vehicles, even if they’re old and rusty, are very expensive investments and it’s common for loans to be taken out to afford them, even for people in excellent financial shape. As most U.S. infrastructure is based around the utilization of motor vehicles, it’s necessary for most people to purchase a car or truck in order to do their jobs, visit family, and buy food.
The financing term for most auto loans tends to be quite long, over the course of 5-6 years or 70 months on average. As both vehicles are very expensive and financial institutions benefit from longer loan terms due to more accrued interest, it’s common for car loans to have substantial repayment periods. Buyers don’t have to deal with the immediate high cost of a vehicle, even if it ends up costing them more in the long-run, and loan providers end up making more money, resulting in long loan terms being the norm.
In total, car loans comprise roughly 9% of all consumer debt, making vehicle purchases a very substantial economic sector worth trillions of dollars. As consumer debt is quite high in the United States, this clearly indicates the relevance vehicles have in society at large; although, it should be noted that car loans still don’t match many other types of financial transactions, proportionally speaking. Keeping that in mind, it would be wise to take car loans seriously when considering the ultimate purchasing power society has in general and the priority people place on certain kinds of purchases over others.
Used cars cost considerably less than new ones, with the average cost of a used car being $8,244. In terms of affordability, used cars present a menagerie of options, although that doesn’t necessarily tell the whole story. Individuals with the ability to purchase newer cars tend to be in good financial health, which allows them to access loan rates and terms that are more favorable, while people who purchase much cheaper used vehicles are usually subject to harsher terms that, while technically cheaper overall, ends up costing them more relative to their financial ability.