SAN ANTONIO – The average monthly car payment for Americans has reached a new record high at more than $700.
New data from the online automotive resource website Edmunds shows average monthly payments hit $733 in the second quarter of the year.
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The data also shows consumers with a monthly payment of more than $1,000 reached an all-time peak of 17.1% for the same time period. For comparison, only 4.2% of car buyers had an average monthly payment of $1,000 or higher during the second quarter of 2019.
“The double whammy of relentlessly high vehicle pricing and daunting borrowing costs is presenting significant challenges for shoppers in today’s car market,” said Ivan Drury, Edmunds’ director of insights. “The Federal Reserve’s recent pause in interest rate hikes unfortunately didn’t offer much relief for consumers, and hints at further raises later this year mean auto loan rates could even continue to increase.”
According to Edmunds, the average consumer is financing more than $40,000 for a new vehicle.
On a typical $40,000 loan, consumers with a 2.9% APR over 36 months can expect to save $8,500 in finance charges compared to those with a 7.9% APR over 72 months, a press release from Edmunds states.
Consumer credit reporting company Experian reported that the average interest rate for a new vehicle increased to 6.58%, from 4.10% the previous year, while the average interest rate for a used vehicle jumped from 8.67% in Q1 2022 to 11.17% in Q1 2023.
“For those with plans to replace their vehicle over the next few months, you may have to reset any expectations of the summer discounts of old,” Drury said. “But, on a positive note, trade-in values remain elevated compared to pre-pandemic times, so shop around to ensure you get top dollar for the asset you own.”
Edmunds provided the following averages for new and used car financing comparisons:
Quarterly New-Car Finance Data
| 2023 Q2 | 2022 Q2 | 2023 Q1 | |
|---|---|---|---|
| Term | 68.5 | 70.3 | 68.8 |
| Monthly Payment | $733 | $678 | $730 |
| Amount Financed | $40,356 | $40,602 | $40,468 |
| APR | 7.1% | 5% | 7% |
| Down Payment | $6,823 | $6,333 | $6,956 |
Quarterly Used-Car Finance Data
| 2023 Q2 | 2022 Q2 | 2023 Q1 | |
|---|---|---|---|
| Term | 68.5 | 70.8 | 68.8 |
| Monthly Payment | $569 | $555 | $551 |
| Amount Financed | $29,665 | $31,448 | $28,610 |
| APR | 11% | 8.2% | 11.1% |
| Down Payment | $4,107 | $3,658 | $3,999 |
For consumers who are looking to buy a new or used car in the coming months, it’s best to shop around with multiple lenders to compare interest rates and find the best deal.
Pre-qualification for purchasing power to buy a vehicle may come with a soft hit to your credit score, so be sure to ask before giving your personal details to any lender.