Auto loans are the third-largest debt category for Americans, with over $1.64 trillion outstanding. Monthly payments have surged due to rising vehicle prices and higher interest rates. Here’s the full breakdown.
Table of Contents
Average Auto Loan Payment Overview
| Metric | New Cars | Used Cars |
|---|---|---|
| Average monthly payment | $738 | $532 |
| Average loan amount | $40,900 | $27,200 |
| Average interest rate | 6.8% | 10.2% |
| Average loan term | 68 months | 66 months |
| Average down payment | $6,700 (14%) | $4,100 (13%) |
Auto Loan Payments by Credit Score
| Credit Score | New Car APR | Used Car APR | Payment (New, $40K) | Payment (Used, $27K) |
|---|---|---|---|---|
| 781–850 | 4.8% | 5.9% | $648 | $472 |
| 661–780 | 6.4% | 8.2% | $693 | $510 |
| 601–660 | 9.5% | 13.1% | $784 | $585 |
| 501–600 | 13.2% | 18.4% | $891 | $672 |
| 300–500 | 16.5% | 21.0% | $984 | $732 |
The difference between excellent and poor credit on a new car loan is $336/month or $22,848 over the life of the loan.
Auto Loan Payments by Loan Term
For a $35,000 loan at 7% APR:
| Loan Term | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 36 months | $1,081 | $3,916 | $38,916 |
| 48 months | $838 | $5,224 | $40,224 |
| 60 months | $693 | $6,580 | $41,580 |
| 72 months | $598 | $8,056 | $43,056 |
| 84 months | $530 | $9,520 | $44,520 |
Extending from a 48-month to an 84-month loan saves $308/month but costs $4,296 more in total interest.
Average Car Prices
| Vehicle Type | Average Price (2026) |
|---|---|
| New car (average) | $48,700 |
| New truck | $57,200 |
| New SUV | $46,800 |
| New sedan | $34,900 |
| New electric vehicle | $52,300 |
| Used car (average, 3 years old) | $30,500 |
| Used car (average, 5 years old) | $24,100 |
| Used car (average, all ages) | $27,200 |
New car prices have stabilized after dramatic increases in 2021-2023, but remain 30%+ above pre-pandemic levels.
The 20/4/10 Rule for Auto Loans
Financial experts recommend the 20/4/10 rule:
- 20% down payment
- 4-year (48-month) maximum loan term
- 10% of gross income maximum for all car expenses (payment + insurance + gas + maintenance)
What Most Americans Actually Do vs. The Rule
| Metric | Recommended | Actual Average |
|---|---|---|
| Down payment | 20% | 13-14% |
| Loan term | 48 months | 66-68 months |
| Income share for car costs | 10% | 15-18% |
Car Payment Affordability by Income
Based on the 10% rule (payment + insurance + fuel + maintenance):
| Gross Annual Income | Max Monthly Car Budget | Max Payment (after other costs) | Realistic Car Price |
|---|---|---|---|
| $40,000 | $333 | $180 | $10,000–$13,000 |
| $50,000 | $417 | $260 | $15,000–$18,000 |
| $60,000 | $500 | $350 | $20,000–$24,000 |
| $75,000 | $625 | $475 | $28,000–$32,000 |
| $100,000 | $833 | $680 | $40,000–$45,000 |
| $150,000 | $1,250 | $1,100 | $65,000+ |
Strategies to Reduce Your Auto Loan Payment
Before Buying
- Improve your credit score — Even a 50-point improvement can save thousands
- Save a larger down payment — 20%+ eliminates being underwater on the loan
- Get pre-approved — Compare rates from banks, credit unions, and online lenders before the dealership
- Buy certified pre-owned — 1-3 year old CPO vehicles save 20-40% vs. new
At the Dealership
- Negotiate the total price, not the monthly payment — dealers stretch terms to hit your number
- Compare dealer financing with your pre-approval — use it as leverage
- Skip unnecessary add-ons — extended warranties, GAP insurance through dealer, paint protection (buy GAP elsewhere if needed)
After Purchase
- Refinance after 6-12 months — If your credit has improved or rates have dropped
- Make biweekly payments — One extra payment per year saves $1,000+ in interest
- Round up payments — Paying $750 instead of $738 reduces the loan term by months
Underwater Auto Loans
An estimated 25% of car owners owe more than their vehicle is worth (negative equity). This happens when:
- Low/no down payment
- Long loan terms (72-84 months)
- High interest rates
- New car depreciation (15-20% in year one, 50% by year five)
If you’re underwater:
- Keep making payments — don’t voluntarily surrender
- Make extra principal payments when possible
- Avoid trading in until equity turns positive
- Consider refinancing to a shorter term if rates allow
Auto Loan Debt in America
| Metric | Amount |
|---|---|
| Total US auto loan debt | $1.64 trillion |
| Number of auto loans | 107 million |
| Average balance per borrower | $23,800 |
| 60+ day delinquency rate | 3.4% |
| Average credit score of auto borrowers | 710 |
Related: Average American Debt | Average Credit Score | Debt Snowball Calculator | Average Income
