Average Car Payment and Why Yours Might Be Too High

Quick answer: Recent reports from Experian and Edmunds put the average new-car payment at roughly $700 a month and used-car payments somewhat lower, with both climbing over the past several years. But an average is not a budget. Your payment is too high if it crowds out savings or debt payoff, and a simple income-based check will tell you.

If you are staring at a car payment that feels heavy, you are in a very crowded club. Millions of US drivers carry payments that eat a big chunk of their monthly cash. This article explains the average car payment, what has pushed it up, and how to run the math on your own loan.

Want to see whether a lower rate could shrink your payment? You can request free options to lower your interest rate using the form on this page.

What Is the Average Car Payment in the US?

Exact figures change every quarter, so treat any number you read as a snapshot. Two sources publish regular auto finance data: Experian’s State of the Automotive Finance Market reports and Edmunds’ quarterly vehicle price and financing analyses. Check their latest releases for current numbers.

Here is what the general picture has looked like in recent reports:

• New-car payments: typically in the high hundreds of dollars a month, with a meaningful share of buyers paying well over that.
• Used-car payments: usually lower than new, though still higher than they were a few years ago.
• Loan terms: the most common terms have stretched to 60 to 72 months, and plenty of loans run longer.
• Interest rates: they vary widely by credit score. Borrowers with weaker credit often pay far higher rates than those with strong credit.

Averages blend luxury trucks with budget sedans and excellent credit with fair credit. Your own situation could be far from the middle, in either direction.

Why Car Payments Keep Climbing

No single villain explains it. Several forces stack on top of each other.

• Higher sticker prices. The average transaction price for new vehicles has risen substantially over the last several years, and trucks and SUVs make up a large part of sales.
• Higher interest rates. When rates rise, the same price produces a bigger payment.
• Longer terms. Stretching a loan lowers the monthly bill but raises total interest and keeps you in debt longer.
• Negative equity rollovers. Some buyers roll what they owed on a trade-in into the new loan, which inflates the balance from day one.
• Add-ons. Extended warranties, gap coverage and fees can be financed into the loan too.

The result is a payment that can look manageable on a monthly basis while costing thousands more over the life of the loan.

A longer loan lowers the monthly payment, but it usually raises the total you pay.

How to Tell If Your Car Payment Is Too High

Forget the national average for a minute. Use your own numbers.

Step 1: Look at the payment against your take-home pay

Many personal finance writers suggest keeping the car payment itself to roughly 10 to 15 percent of take-home pay, and total vehicle costs (payment, insurance, fuel, maintenance) to something like 15 to 20 percent. These are rules of thumb, not laws. If you are paying off other debt, tighter is better.

Step 2: Check the warning signs

• You are using a credit card to cover gaps after the payment hits.
• The loan term is 72 months or longer.
• You owe more than the car is worth.
• The payment competes with an emergency fund or higher-interest debt.

Step 3: Run the cost of the loan

Multiply your payment by the number of months left, then subtract your current balance. The difference is the interest you still have to pay. If that number makes you wince, your rate or term deserves attention. The Debt Burn-Down Calculator will show how fast a balance falls under different payment amounts.

Ways to Lower a Car Payment You Already Have

You are not stuck with the loan as written. Here are the main moves, roughly from least to most disruptive.

1. Refinance at a lower rate. If your credit has improved or rates have dropped since you signed, a new loan may cost less. Read refinancing a car loan: when it lowers your payment and when it does not before you apply, because stretching the term can backfire.
2. Ask about shopping around. Credit unions, banks and online lenders may offer different rates than the dealership financing you took.
3. Make extra principal payments. This does not lower the required payment, but it shortens the loan and cuts total interest.
4. Sell or trade down. If the car is more than you can carry, moving to a cheaper vehicle may be the cleanest fix. Our guide on how to get out of a car loan you cannot afford walks through the options.

Also check whether your loan has a prepayment penalty before paying it off early. Many auto loans do not, but terms vary by lender and state.

Your rate, your term and your price are the only three levers on a car loan.

Paying Off Your Car Loan Faster

Once the payment is manageable, shorten the timeline. Small extras add up because auto loans accrue interest on the remaining balance.

• Round up. Paying a few extra dollars each month can trim months off the loan.
• Apply windfalls. Tax refunds and bonuses can take a big bite out of principal.
• Confirm it hits principal. Tell your lender to apply extra money to principal, not future payments.
• Try the calculator. Our car loan payoff calculator with extra payment scenarios shows exactly how much time and interest you save.

For the full strategy, see the car loan payoff guide. If you are weighing a split-payment approach, read whether biweekly car payments save money.

Another idea some borrowers explore is using a 0% promotional card to pay down a car loan. We will cover that in a future piece on using a balance transfer to pay off a car loan.

Buying Your Next Car Without Repeating the Problem

If you are shopping now or planning to soon, a few habits keep payments sane.

• Set the monthly ceiling first. Decide what payment fits before you walk into a dealership.
• Get pre-approved elsewhere. A pre-approval gives you a rate to compare against dealer financing.
• Put money down. A larger down payment reduces the balance and the risk of owing more than the car is worth.
• Keep the term short. If the payment only works on a very long loan, the car may be too expensive.
• Consider used. A well-maintained used vehicle often costs far less per month.

For official consumer guidance on auto financing, the Consumer Financial Protection Bureau’s auto loan resources are a solid, non-commercial starting point.

Ready to see whether a lower rate is available on your auto loan or other debts? Request free, no-obligation options using the form on this page.

Frequently Asked Questions

What is a good car payment?

There is no universal number. A common guideline is to keep the payment to roughly 10 to 15 percent of take-home pay and total vehicle costs to a modest share of income. If you are carrying other high-interest debt, aim lower.

Where can I find the current average car payment?

Experian publishes regular auto finance market reports, and Edmunds shares quarterly data on prices and financing. Because figures change often, check their latest releases rather than relying on an older number.

Is a 72-month car loan a bad idea?

Not automatically, but it carries risks. You pay more total interest, and you are more likely to owe more than the car is worth for longer. If a car only fits your budget on a very long term, consider a cheaper vehicle.

Can I lower my car payment without selling the car?

Often, yes. Refinancing to a lower rate is the most common route, especially if your credit has improved. Just watch the term, because a longer loan can lower the payment while raising the total cost.