Although the market for used vehicles has shown signs of cooling of late, auto financing and higher sticker prices are putting a serious dent in consumer wallets.
What Is the Average Car Payment Right Now?
The average monthly payment for a new car is $717, according to recent data from car valuation site Edmunds.com. That’s a $14 jump from the month before. The average car payment for a used vehicle is $563, which was down $2 from the previous month.
Here are the average costs associated with owning a new and used car as of December 2022 according to Edmunds:
|Type of Vehicle||Monthly Payment||Amount Financed||APR||Down Payment|
Report: More People Paying $1,000+ for Monthly Car Payments
The Edmunds data indicate that more people are paying over $1,000 in monthly payments for their new and used vehicles.
Here are some key findings according to Edmunds:
- A record-high 15.7% of consumers who financed a new vehicle in the fourth quarter of 2022 signed on for monthly payments of $1,000 or more. For comparison, that figure was 6.7% in the fourth quarter of 2020.
- 5.4% – also an all-time high – of consumers who financed a used vehicle in the fourth quarter of 2022 committed to car notes of $1,000+. That figure was 1.5% in the fourth quarter of 2020.
- Down payments on new and used vehicles also broke records, according to Edmunds, averaging $6,780 and $3,921, respectively.
Before you finance a vehicle, you should know that Clark doesn’t want you to sign anything that locks you in for more than 3.5 years or 42 months.
“The longest auto loan you should ever take out is 42 months,” Clark says. “If you can’t afford the payment on a 42-month loan, then you should buy a cheaper car.”
The reasons you don’t want an auto loan longer than 42 months are:
- Longer terms may mean that you pay less every month, but you’ll pay more over the life of the loan.
- You’ll take on more debt, which could hurt your credit and severely limit your borrowing power.
- You run the risk of becoming “upside down” in the loan, which means you could potentially end up owing more than it’s worth.