How much is an average monthly car payment?
According to Edmunds, monthly car payments have been rising, thanks to the rising cost of new and used cars and rising interest rates.
Edmunds reported that the average annual percentage rate for new financed vehicles in the first quarter of 2023 increased to 7%. That’s a big jump from the 4.4% average rate in the first quarter of 2022. This 7% interest rate is also the highest average rate Edmunds has recorded since the first quarter of 2008.
It’s important to note that the higher the interest rate on your car loan, the higher your monthly payment will be.
And that $730 average monthly payment on new cars that Edmunds reported in the first quarter of this year? This is the highest number ever and also a big jump from the average of $656 in the first quarter of 2022.
Edmunds also reported that 16.8 percent of consumers who financed a new vehicle in the first three months of this year had a monthly payment of $1,000 or more; another record number. Edmunds reported that only 10.3% of consumers who financed a new vehicle in the first quarter of 2022 took on such high monthly payments.
However, you do have some control over your monthly payments. For example, you can lower your monthly car payment with a larger down payment. The more money you put into buying a car, the lower the amount you will have to finance.
Let’s say you’re buying a car that costs $22,000. If you get a down payment of $3,000, you only need to finance $19,000. If you only get a $500 down payment, you’ll need to finance $21,500, leaving you with a higher monthly payment.
You can also lower your monthly payment by building a solid three-digit credit score. The higher your score, the lower your interest rate, which lowers your monthly payment. You can get a good credit score by paying your bills on time each month and paying off your credit card debt.
