Average Car Payments Per Month for New & Used Cars

Most Americans finance a car with an auto loan, but it’s important that your monthly payments are manageable and don’t stretch your budget too thin. A high payment might make it harder to cover other expenses, and missing payments could hurt your credit.

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How much you have to pay monthly is usually determined by your loan amount, interest rate and loan term. Whether a car is new or used also affects monthly payments, with the average car payment for new vehicles being typically higher. 

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Wondering how much the average monthly payment is for new and used cars? Here’s what to expect and how you can lower your payment, whether through refinancing or other options.

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What’s the average car payment per month?

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According to Experian's State of the Automotive Finance Market report from Q4 2024, the average monthly car payment for a new car was $742. In contrast, the typical used car payment was $525 per month. 

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These numbers are simply the average cost of car payments in the U.S. Your actual monthly payment may be higher or lower depending on your car’s value, credit score and loan terms.

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What determines your car payment?

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Lenders take several factors into consideration to determine your monthly car payments. The most influential of these factors include:

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• Credit score: Your credit score significantly affects whether you can get an auto loan and how much interest your lender will charge. A higher score typically means lower interest, leading to lower monthly payments. 
• Loan term: The longer your loan term, the lower your monthly payments will be. However, you’ll end up paying more overall because interest accrues over time. For example, repaying a two-year loan at 5.00% interest will cost less overall than a seven-year loan at the same rate.
• Interest rate: Interest rates affect your total car payment, and they can be high or low depending on your credit score, loan term and lender. For example, repaying a $30,000 two-year loan with 5.00% interest will cost $1,316 monthly, while the same loan with 12% interest will cost $1,412.
• Loan amount: The more you borrow, the higher your monthly payments will be. But if you make a larger down payment, you’ll owe less and pay less monthly.
• Type of car: Since new, large or luxury vehicles cost more, they require bigger loans, leading to higher monthly payments. In contrast, used cars are more affordable and require smaller loans. But average car loan rates on used vehicles tend to be higher because lenders see them as riskier investments.
• Location: Where you buy your car may impact your monthly payment amount because insurance rates, taxes and interest rates can vary between states and cities. For instance, monthly payments for a vehicle in New York may be higher than in North Carolina due to higher taxes and fees.
• Add-ons: Including add-ons like GAP coverage or a service contract in your loan can increase your normal car payment. 

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Average monthly car payments by credit score

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Based on Experian’s Q4 2024 report, here's a table of average car payments by credit score:

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This data shows just how much your credit score can influence your monthly payments. In general, a better credit score means more favorable rates and monthly payment amounts, but you’ll notice this isn’t always the case.

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For example, you’ll notice from the table that deep subprime borrowers (300-500) have the lowest average car payment per month for new cars. How come? It’s likely because they borrow less to finance cheaper cars and choose shorter loan terms.

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How to lower your car payment

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If you’re paying more than the average car payment per month, there may be ways to bring that number down. Here are some suggestions for lowering your car payment:

1. Improve your credit score and negotiate a lower rate: By improving your credit, you may qualify for a lower interest rate, reducing your monthly costs. If your credit has improved, ask your lender for a rate reduction or shop around for better offers.
2. Refinance your loan: If interest rates have dropped, refinancing can secure a lower rate and reduce your monthly payments.
3. Extend loan term: Choosing a longer loan term can lower your monthly payments, making them more manageable. However, you'll pay more in interest over time.
4. Make a larger down payment: A bigger down payment reduces your loan amount, which means you could pay less each month.
5. Choose a less expensive car: Opting for a more affordable vehicle, such as a used car, means borrowing less, resulting in lower payments.

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If a lower car payment would give your budget some breathing room, refinancing might help. See how much you could save with RefiJet today.

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FAQs

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Here are some commonly asked questions about average car payments:

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Is $1,000 a month a lot for a car payment?

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$1,000 a month is higher than the average monthly payment, even for borrowers with low credit scores. While this monthly payment is high, it's not out of the ordinary if you're financing a luxury vehicle or have a high interest rate. Your monthly payment may also be high if you choose a short loan term with a large principal balance.

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How much of your monthly budget should your car payment be?

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A good rule of thumb is that your car payments shouldn’t exceed 10% to 15% of your monthly take-home pay. Following this guideline helps ensure you have enough funds for your savings and other expenses. Depending on your financial situation and goals, you may allocate more or less of your monthly income to your car payments.

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Are average car payments more or less than leasing a car?

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Average car payments for vehicle financing are generally higher than lease payments. When you finance, you pay off the whole car, which results in higher monthly payments. But when leasing, you only cover its lost value over time, plus interest and fees. 

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Can I refinance my car payment to reduce it?

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Yes, refinancing is an effective tactic for lowering monthly car payments. It works by replacing your current loan with a new one that has better terms for you, such as a lower interest rate or a longer repayment term.

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