Average Car Payment Per Month: What To Expect

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

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Whether you’re shopping for a new, used, or leased car, you’re probably going to finance your purchase using a car loan if you’re like many Americans. Knowing your average car payment beforehand is crucial, as it will give a better idea of your overall cost over time.

The average car payment per month is dependent on many factors. How much you’ll owe each month is based on your income, credit score, whether you’re buying a new, used, or leased car, the size of the loan, and the length of the loan.

We’ll let you know how much you can expect to pay each month for a car loan and what affects your monthly auto loan payments.

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How Do Car Loan Payments Work?

If you’re shopping for a new car but don’t have enough cash on hand, a car loan can help you purchase it. Every time you take out an auto loan, you’re essentially borrowing a lump sum amount from a lender to buy a car and agree to pay back the principal (the actual amount borrowed) plus interest. 

Until such time you pay back the loan in full, the lender retains the ownership of the vehicle and may repossess it if you fall behind on payments or default on the loan. 

You can apply for a car loan or refinance a car loan at banks, credit unions, online lenders like Auto Approve, and directly from car dealerships. 

Common Car Loan Payments Items

Before you sign car loan documents, it’s essential to understand some of the most popular car loan payment items.

Actual Amount You Borrowed or Principal

The principal or the amount you borrow is the most apparent car loan payment item. Knowing your car loan principal is key because it is the total amount, you’re liable to pay back. The principal does not include interest, taxes, and other fees the lender might roll into your monthly payments.


Lenders typically charge interest on loans. Like the annual percentage rate (APR), interest rates don’t include other costs, such as origination fees. The interest rate you’ll pay on your loan will vary from lender to lender, so it’s wise to use APR as it gives a clear picture of the overall cost of a loan.

Other Costs and Fees

Apart from the loan principal and interest charged by lenders, there are other additional fees associated with car loans. Your auto loan debt will likely include extra costs like vehicle registration fees and state sales taxes that add to your monthly car payments.

Factors That Affect Your Car Loan Monthly Payments

Several factors go into determining the average monthly car payment. Here’s what goes into the calculation:

New vs. Used vs. New Leased Car 

How much car loan payments you’ll pay each month depends on whether you bought a new, used, or leased car. You can expect your monthly car payments to be high for new vehicles because such cars come with a high price tag. On the flip side, monthly payments for used cars are lower than leased and new vehicles.

The Type of Car 

The make and model of the car you’d like to purchase also figures highly in your monthly car payment. So whether you’re looking to buy a truck, SUV, or sedan car, lenders will always factor in the type of car you pick in your average car payments. 

Your Credit Score 

Your credit score is another determining factor lenders use to evaluate your creditworthiness as a borrower. People with a high credit score or good credit report often qualify for lower interest rates and more favorable loan terms as they’re considered less risky borrowers.

If you have bad credit, you may end up paying high monthly payments. This is because lenders view individuals with low credit scores as high-risk borrowers who might default on loan payments. For this reason, they charge high monthly car payments to reduce their losses.

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Get a quote to refinance your auto loan in minutes with no credit check. See how much you can save with historically Low Rates! Skip Up To 3 Payments. A+ Rating From BBB.

Vehicle Age

How old your car also determines the average car payments you’ll need to pay each month. Generally, new cars have high monthly payments because of the higher price tag. The reason is based on the lender’s risk. If a borrower defaults, the creditor can recoup most of its losses since new cars have a high resale value. 

The Lender

The average monthly car payments differ from one lender to another. Online lenders and credit unions typically charge lower interest rates than banks and car dealerships. Lower rates could mean lower monthly payments.

Loan Term

The loan term or length of the loan determines how much time you have to pay off your debt. Typically, the shorter the loan term is, the higher your monthly payments will be. On the flip side, longer loan terms will result in lower monthly payments. However, longer terms come with trade-offs 一 you might pay more in interest over the life of the loan.

What Are the Average Car Payments in the U.S.?

The average car loan payment per month has risen to all-time highs, according to Experian’s 2021 fourth-quarter State of Automotive Finance Market. These averages depend on whether you’re buying a new, used, or leased car. The average car payment for a new vehicle is $644, $488 for a used car, and $531 for a leased car.

Keep in mind, though, that the average car payments you’ll pay each month will vary depending on your loan amount. Getting the hang of these average payments will give you a better idea of what you can expect when shopping for a car. 

Despite the average car payment, it’s prudent to take your time to review your budget and decide whether you can afford a new or used car before you start shopping.

How to Lower Your Monthly Car Payments

If you want to lower your car payment, here are some things you should consider.

Get a Cheaper Car 

The pricier the car, the higher the monthly payments. Conversely, inexpensive vehicles translate to lower car payments. Consider going for a cheaper car with features similar to your dream vehicle to reduce your car payments per month.

Negotiate the Car Price 

Shop around and compare car prices before you make a purchase. This will help you get a price that works for your current financial situation. Kelley Blue Book is a great site for car comparisons. Additionally, you can also negotiate the car price to lower your monthly payments.

Lease a Vehicle 

The monthly payment for leasing a car is typically lower than buying a new vehicle. So if your goal is to lower your monthly payments and get behind the wheel of a new car, leasing might be a good idea. Leasing won’t lead you to own the vehicle outright, though, unless you take steps to buy the car near the end of your lease. 

Refinance Your Existing Car Loan 

If you previously purchased your car with an auto loan, you can lower your monthly payments by refinancing. Refinancing a high-interest car loan with a low-interest loan will help you save money over time. 

Auto Approve is an online platform that can help you refinance your vehicle and lower your monthly payments – and get an auto lease purchase loan for those who want to purchase their car after leasing. The online lender not only offers competitive rates starting from 2.25% APR but also handles all your paperwork. Get a quote from Auto Approve for more information on vehicle refinance.

Lower Your Interest Rate & Monthly Payments
Get a quote to refinance your auto loan in minutes with no credit check. See how much you can save with historically Low Rates! Skip Up To 3 Payments. A+ Rating From BBB.

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