Home 35 Insightful Auto Loan Statistics to Help You Save Money

35 Insightful Auto Loan Statistics to Help You Save Money

by Tony Arevalo
Car Loan Statistics Cover Image

The market for passenger vehicles in the US has grown in both cost and volume over the past few years. With the average car loan being much more accessible to adults of all generations, it seems that the second wave of motorization is on the move. Still, the circumstances are slightly different nowadays.

Today, anyone interested in taking out a car loan in order to purchase a vehicle, either new or used, has to consider a range of elements beforehand. The most obvious place to start would be looking up the amount for an average car payment in America. However, finding out more about the actual factors influencing the loan itself is never a bad idea. For example, the cost of a car is one such factor and it can vary widely depending on the deal you get and the model you are looking to purchase. Credit scores, as well as loan terms and a range of other factors, will also affect the cost of this financial endeavor. Hence, a basic understanding of all these is sure to be of use.

Essential Auto Loan Statistics (Editor’s Pick)

  • Americans now owe a total of $1.16 trillion in car loans.
  • Banks take the lead with $368 billion in car loans according to the latest data.
  • Up to 85% of car owners turn to loans in order to purchase a vehicle.
  • Interest rates are lower for new cars (5.11%) as opposed to used ones (7.68%).
  • People ages 45–64 have the highest amount of car loan debt — $19.9 billion.

Average Car Loan Amount in the US by Year

1. New car loans reached a record high for Q3 of 2019 topping $32,000 for the first time

More precisely, the average loan amount for a new car was estimated at $32,480, which inadvertently increased the average monthly payment as well. For the first time, the monthly charges for new car loans reached $554 in Q1 of 2019; this amound dropped to $550 in Q3.

Source: Experian

2. A new high in average car payment amounts was noted for used cars as well — $20,446

This number was estimated based on data from the third quarter of 2019; compared to numbers from the same period last year there’s a significant $585 increase. Monthly payment amounts also increased by $12 and the average sits at $393. Although high, it is still more affordable than the average loan payments for new vehicles.

Source: Experian

3. Auto loan statistics for 2018 showed 27 million new loans originating in the US

If this number is turning heads, just wait for the number of car loans originating in 2016; those are definitely making the books. After all, these latest estimates for 2018 are still 540,000 less than the record highest, taking the lead only in reference to the previous year (2017) by a wide margin of 183,000 loans.

Source: LendingTree

4. Car loan facts from lenders show that Americans owe $1.16 trillion in total car loan amounts

A total of $1.18 trillion was calculated in March 2019, with a significant increase since 2017 when the total amount of loans across all lenders was $1.129 trillion. Back then, the biggest share of the loans was reported by the banks — $368 billion, $313 billion in car loans were reported by all credit unions, while captive auto companies and finance companies contributed to the whole with $259 billion and $189 billion, respectively.

Overall Outstanding Auto Loan Debt in the US by Year

Source: Experian

5. An average American car payment is being paid off by nearly half the nation’s population

Up to 44% of all adult residents in the country rely on loans to obtain a car; this wasn’t always the case. However, due to lower financial independence and greater expenses, an increasing number of individuals are turning to such aid.

Source: Finder.com

Total Number of Car Loans in the US by Year

 

6. Car loan statistics over the past decade show a drastic increase in loan accounts

The practice of taking out a loan for a vehicle purchase was much less frequent at the beginning of the decade, with an estimated number of car loan accounts for 2011 reaching only 80.24 million, whereas the same numbers for 2016 and 2017 are 103.69 million and 108.66 million loan accounts, respectively. A graph showing the total number of auto loans in the US per Year Source: NewYorkFed

7. Typical car loan account numbers for the previous decade are in a much tighter range

In other words, the number of car loan accounts originating in that time span ranges between 74 million to 80.90 million. The most drastic increases were noted in the years 2007 and 2008 — 87.25 million and 86.99 million accounts, respectively. Source: Finder.com

8. People trust banks the most — the majority of car loans originate from banking institutions

One way of answering “how much is the average car payment” and “how to change it” is to consider various financial institutions. Records from years back show that people place most of their trust in banks, although a growing number of people have also gone with credit unions. From 2015 to 2017, the total open balance amount for banks changed from $337 billion to $368 billion; for credit unions — $241 billion to $313 billion, respectively. Source: Finder.com

9. Car payment for about 85% of new passenger vehicles is done with some kind of financing

According to the Q3 report for 2019 from Experian, up to 85.4% of all new vehicles in the market are purchased with the help of some kind of financing — loan or lease. The percentage has hardly changed since last year’s numbers  (85.2%) and the difference in numbers is only slightly more notable for used car financing — 52.8% in 2018 and 54.7% for 2019. Source: Experian

10. Up to 40 million used, budget cars have been purchased across the US in 2018 alone

As it seems, less expensive cars are becoming all the more popular among American households, mainly due to cost factors. And with 2019’s latest assessments showing an increased price gap between new and used cars — $35,250 and $20,390, respectively — it seems that the words “used” and “budget” are becoming all the more synonymous. Source: Statista 

Average New Car Payment vs Used Car Payment

11. In today’s market, it pays off to buy CPO or used cars than getting new ones

To elaborate, new cars tend to lose 10% of their value as soon as they’re out of the dealership, and another 10% during the first year. Contrary to this, both certified pre-owned (CPO) and used vehicles may lose some value during the first year, and even less afterward.

Source: Debt.org

12. The average car payment in December 2018 is still ranking highest for both new and old car loans

While there may be differences on an individual basis, the total data accumulated up until the end of 2018 showed that December had the highest payment amount for all car loans. 

Both new and used cars averaged at a record high $23,438 average loan size that month. Such fluctuations are not at all that surprising, considering that payments generally soar near the year’s end and then plunge in February.

Source: LendingTree

13. The average US car payment per month has risen 5.6% for new, and 4.9% for old cars over a year

This is the rate at which monthly car payments for the respective car loans have risen since 2018, largely due to the increased prices of new, as well as used cars. After all, prices have gone up by 3.7% and 2.5% respectively, all at the cost of the prospective loan originators.

Source: LendingTree

14. The most popular average used car payment term per month in America is between 73 and 84 months

Up to 42.1% of all used car loans are taken out for longer terms within these time frames, seeing a 3% increase since last year’s Q1 report. The greatest fall from popularity goes to the shortest terms, ranging between 37 and 48 months. 

Alternately, most new loans are taken out for 85–96 months (up to 38%), and the least for terms ranging between 49–60 months. Nevertheless, they now make up 20.8% of all new car loans, experiencing an 18% jump since last year.

Source: Experian

15. Average new car interest rates are normally the lowest of the lot — around 5.11%

Even though brand new cars are the most expensive option in terms of car value and loan amount, the interest rate is usually the lowest. Contrary to this, franchise used cars and independent used cars come at much lower market value and consequently face a much steeper interest rate — 7.68% for franchise cars and 11.48% for independent used cars.

Source: Finder.com

Auto Loan Debt and other Major Debts

 

16. Auto loan debt is approximately 10% of all consumer debt people in America have

Considering the fact that, according to the latest estimates, auto loan debt in Q1 of 2019 has reached about $1.16 trillion, consumer debt is quite the amount for US residents. What’s more, if you consider that mortgages are also part of the total number, it makes the entire situation all the more alarming. Source: LendingTree

17. The average interest rate for car loan origination in the US for 2018 was estimated at 4.21% for all loans

This will differ based on various factors, one of which is the type of vehicle (old or used) that you are planning on purchasing. Other elements included in the process of loan origination can also affect your interest. However, it is important to remember that a higher interest doesn’t always mean a pricier loan option; do the numbers before discarding any loan offers completely. Source: Debt.org

18. Car debt was 9.27% of all consumer debt in the US for 2017

Numbers have been spiking back up since 2011 after witnessing the largest drop (5.94%) of all loan debt in 2010. Even so, car loan debt is still a much smaller amount than the whole of US’s debt, with mortgages taking up 67.63% of the entire amount, and student loans accounting for 10.5% of all personal debt held by people in the US. Source: Finder.com

19. GAP insurance is a good solution for outstanding auto loan debt in some cases

The Guaranteed Auto Protection (GAP) insurance can help owners who needed some kind of financing for their auto purchase in several particular cases. Vehicle depreciation, a common cause of debt, can reach up to 60% in three years of normal driving but is one of the scenarios prevented by taking out GAP insurance along with your regular car insurance. Source: IWS Group & Insurance Information Institute

20. Bank of America auto loans present 3 key factors to consider in order to avoid car loan debt

Bank of America provides all its potential clients for car loans with some free financial advice. More specifically, they point out the three key factors that affect the total cost of car loans — the loan amount, the APR (annual percentage rate of interest), and the length of the loan term. A loan calculator is also provided to individuals to match and compare options in order to reach their most optimal one. Source: Bank of America

Average Car Loan Length

 

21. Longer car loan terms are growing in popularity all over the US

A longer-term for your car loan will most likely mean a lower monthly loan payment, but that isn’t all there is to it. If you look more closely, the longer term of the loan will end up incurring a range of other costs you hadn’t thought of, such as interest. Source: Debt.org

22. The increased average length of car loan payments across the US has made collateral a welcome addition to loan terms

The thing with secured loans, in general, is that people taking out a loan provide some kind of property as collateral in order to improve their loan terms. While it may not decrease their interest rates, it does provide some security for the bank and the prospective car owner in case they default on their loan. Source: Finder.com

23. Generally speaking, the average car loan payment term for new cars is 69 months long

If you decide to purchase a new car in the US at this moment, your loan term will most likely be a little less than 6 years. The term length will decrease slightly if you choose to buy a used car — up to 65 months on average. Still, there are some factors to consider and adjust to reduce it — making a larger down payment is one of them. Source: LendingTree

24. Your credit score can also affect the length of your car loan on average

What is the average length of a car loan for middle-tier borrowers isn’t the same for lower tier borrowers. Top tier borrowers will get the best terms in their loan contracts, and thus, the shortest lengths — up to 63 months on average. Compared to 73 months average length for mid-tier borrowers, the nearly one-year extension is bound to make a difference. Source: LendingTree

25. Lengthier loans are putting more and more people in debt

Automobile debt is most common among people that get longer terms for their auto loans. The fact that these are most often lower-tier borrowers with a lesser credit score makes the situation all the harder for them. Not only do they not have the funds to cover the expenses, but they are additionally burdened with even bigger ones. Therefore, understanding how car loans work is essential for successful financing. Source: Bank of America & LendingTree

Car Loan vs Lease Statistics

 

26. Leasing a car incurs a monthly payment that is $97 less than the average loan payment

According to Experian estimates, people leasing cars instead of taking out loans to buy them will face lower monthly charges. The difference in payments averages around $100, although it is subject to changes based on the individual terms of your leasing contract. Source: Experian

27. Auto lease average length according to most recent estimates amounts to slightly over three years

Compared to terms for new and used car loans, which average between less than six and up to eight years in length, leases are definitely the shorter way out. The average length being about three years has made it possible even for subprime-tier borrowers to get a car to their name. Source: Experian

28. Car lease percentage of the total automotive financing, as estimated for Q1 of 2019, amounts to 29.07%

For the same period last year, car leases made up 29.83% of the total automotive financing market, meaning that the volume of leases has been stabilizing at around 30% of the whole. A stable dominance on the lease market has also been noted for new car leases, while used car leases are present with just 4.7% of the total market. Source: Experian

29. When choosing whether to lease or buy a car, the former wins due to the $457 monthly payment on average

An increase of 5% has been noted in the average monthly payments for auto leases — the equivalent of $21 a month. Still, even at that, it is less than the charges incurred for loans. For example, one of the more expensive car models, Grand Cherokee, would incur a $617 monthly payment for loans, as opposed to a $487 monthly payment if you decide to lease out. Source: Experian

30. One of the most popular budget car models for Q3 2019 across the leasing market is the Honda Civic

The Honda Civic makes up a total of 3.9% of the market share, followed by the Honda CR-V and Toyota RAV4. The latter two dominate the market with more than a 3% presence — 3.4% and 3.1%, respectively. The topmost popular leasing model costs $303 in monthly payments for a lease, whereas $418 is the equivalent for an auto loan, which makes all the difference. Source: Experian

Car Loan Debt, Demographics, and Credit Score

31. Gen X individuals are most likely to be in auto loan debt

The median loan balance for Gen Xers amounts to a total of $18,741. This one tops the runner-up by 9%, which means that these people are most likely to end up in auto loan debt.

Source: LendingTree

32. Baby boomers are considered to have among the highest monthly gross income, but also the most debt

People from the age group ranging between 45 and 64 hold the largest portion of auto loan debt — in December 2018, it was estimated to amount to $19.9 billion in total. Plus, they owe more than millennials — their averages being $17,185 and $16,200, respectively. Second to this generation in terms of mass auto loan debt is the group of people ages 30–44, who have been estimated to owe about $16.3 billion in auto loan debt.

Source: LendingTree

33. People from Gen Z hold the lowest median amount of auto debt — $13,666

Naturally, those born in the mid to late 1990s, also known as Gen Z, have less capital to their names, mostly due to lower pay grades and younger age. Therefore, it is only understandable that they hold the least amount of loan debt, and consequently, the smallest share of new vehicles — 3.8%. Nevertheless, the latest trends are showing an increase and it remains to be seen how things will play out for them.

Source: LendingTree & Experian

34. The average vehicle loan interest rate depends on the borrowers’ credit score

People with higher credit scores — in the prime and super-prime tiers especially — are most likely to get bigger loans under better terms. 

According to Experian, these rates range between 661–780 and 781–850 respectively. Since 2004, the median credit score for borrowers was 650, but in Q1 of 2019, it was estimated at 720. In fact, these people took the lead in loan amounts, borrowing $25.8 billion in December 2018, compared to those with credit scores below 720 — $22 billion.

Source: LendingTree & Experian

35. Subprime auto lending is holding steady and making use of budget auto offers and GAP insurance

One of the main groups of borrowers who can benefit from GAP insurance is those with nonprime and subprime credit scores. Still, it seems they are making ends meet, as they are holding a steady 20% of the whole market, and also manage to keep up the pace with their payments, just like the remaining groups of borrowers.

Source: Experian

Bottom Line

Based on the latest statistics, the average car payment amounts jumped up by 5.6% since 2018, and the same trend is noted in monthly car loan payments for used cars, as well as for leases. With more and more people across the US being dependent on some kind of financing in order to make a car purchase, the amount of car loan debt has also risen.

All in all, average car loan offers can change depending on a number of factors, and each person will need to determine the best amount and terms for their personal financial competence. That is why it is best to understand the entire process of loan origination beforehand (to make the best possible decision), and only later take up the endeavor of obtaining the actual financing.

Frequently Asked Questions

1. What is the average monthly car payment in the US?

The average monthly car payment for new cars is $550, while used car loan monthly payments amount to $393.

2. What is a good rate for a car loan?

A good rate for a car loan is somewhere around 4% to 5%, with the average for the US still around 4.21% for a 60-month loan.

3. Is a 72-month car loan bad?

Nowadays, a typical auto loan term amounts to even more than 72 months, but the general impression is that even a 72-month car loan can be bad depending on your interest. If you do the numbers, a longer loan such as this one would suggest a smaller monthly payment. However, by paying it, along with fees and interest and other costs, this can turn out to be a much more costly option.

4. How long is the average car loan in the US?

The average length of a new car loan is 69 months, while for used cars, it is 65 months.

5. Why financing a car is a bad idea?

The main reason why this is a bad idea is due to car depreciation, that is, the car will lose value the moment you take it out for a drive, meaning you will owe more money than the value of your car.

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