Monthly Car Payments for New Vehicles Are at Record Highs

Auto-loan interest rates are at their highest since the Great Recession, according to third-quarter (Q3) data from Edmunds.

The average annual percentage rate (APR) is currently 7.4% for new vehicles and 11.2% for used ones, Edmunds reports. At those rates, the average monthly car payment for a new vehicle is $736 — an all-time high — while the average for used vehicles is $567.

Record financing costs

New vehicles cost an average of $47,936 in October 2023, according to Kelley Blue Book (KBB). Vehicle prices skyrocketed during the COVID-19 pandemic, affected by supply chain issues, a semiconductor shortage, and auto plant shutdowns. When car buyers can’t save enough for a cash payment, they frequently turn to borrowing.

Although data from Experian indicates fewer buyers are financing vehicles, nearly 80% of new vehicles sold in the first half of 2023 were financed.

Edmunds reports that the number of buyers with monthly new-car payments of $1,000 or more is increasing. In the third quarter of 2023, 17.5% of buyers had four-figure car payments, up from 17.1% in the previous quarter.

Also in the third quarter, the average amount financed for new vehicles was $40,149, and $29,328 for used vehicles — down from the previous quarter.

Auto-loan interest rates are at their highest since the Great Recession, according to third-quarter (Q3) data from Edmunds.

The average annual percentage rate (APR) is currently 7.4% for new vehicles and 11.2% for used ones, Edmunds reports. At those rates, the average monthly car payment for a new vehicle is $736 — an all-time high — while the average for used vehicles is $567.

What’s next

Interest rates will likely remain high or even increase slightly before the end of the year, predicts Edmunds. You won’t find the same pandemic-era deals today, but you could still get a better rate from auto manufacturers offering incentives and rebates.

Despite rising interest rates, there’s some good news for car buyers. New-vehicle prices are slowly dropping, and automobile auction company Manheim forecasts that used-car values will normalize in 2023. Average auto insurance rates have also stabilized, with a slight 0.4% increase in Q3, according to Insurify data.