Is $500 a month too much for a car?

Is $500 Too Much for a Monthly Car Payment? Paying $500 for a car loan monthly payment in 2019 would definitely have been too much. But in 2022, when the average monthly payment is $648, consider yourself lucky if you have just $500 to pay!

way.com - Average Monthly Car Loan Payments: How Much Should You Be Paying?

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With the rising prices in the economy, both new and used cars are getting expensive. How much are you likely to pay as average monthly car loan payments?

One of the biggest expenses after buying a vehicle is to keep paying the monthly car loan payments! Though the loan amount varies depending on several factors (like credit score, APR, loan term, etc), the most important one is definitely the price of the vehicle. The past few quarters have seen skyrocketing prices of both new and used vehicles. What effect has that had on average car loan payments in the US? Let’s take a quick look.

Average Monthly Car Payments: Statistics at a Glance

According to vehicle valuation and pricing service Edmunds, here are the most important statistics to know so far: The average monthly car loan payment for NEW VEHICLES has increased from $639 (Q4 2021) to $648 (Q1 2022) Average monthly car loan payment for USED VEHICLES has also increased from $524 (Q4 2021) to $538 (Q1 2022) from to Average total loan amount to purchase a NEW VEHICLE has increased from $35,040(Q4 2021) to $39,340 (Q1 2022) from to The average total loan amount to purchase a USED VEHICLE has also increased from $23,958 (Q4 2021) to $39,830 (Q1 2022)

What Is Included in Your Monthly Car Payments?

The monthly car payments are calculated based on:

The loan amount borrowed: The final amount after deducting any downpayment, rebate, and trade-in credits. The final amount after deducting any downpayment, rebate, and trade-in credits. The interest rate on the loan: The APR offered after analyzing the borrower’s credit profile The APR offered after analyzing the borrower’s credit profile The total loan term: Length of time for which you want to continue paying the loan Length of time for which you want to continue paying the loan Age of vehicle: New vehicles are costlier than used ones

Average Monthly Car Payments by Credit Score

Credit Score New cars Used Cars 781-850 $582 $443 661-780 $620 $462 601-660 $647 $487 501-659 $638 $481 300-500 $615 $474

Average Auto Loan Amounts by Credit Score

Credit Score Loan amounts for new cars Loan amounts for used cars 781-850 $33,975 $26,010 661-780 $38,950 $27,478 601-660 $39,370 $26,145 501-659 $35,150 $21,830 300-500 $30,010 $18,350

Average Auto Loan Rates by Credit Score

Credit Score Loan rates for new cars Loan rates for used cars 781-850 2.58% 3.68% 661-780 3.64% 5.35% 601-660 6.32% 9.77% 501-659 9.92% 15.91% 300-500 12.99% 19.85%

Average Auto Loan Terms

Credit Score Loan term for new cars (months) Loan terms for used cars (months) 781-850 63.94 64.25 661-780 70.97 67.75 601-660 74.13 67.77 501-659 73.5 64.99 300-500 72.19 65.14 Step 1: Find the total loan amount you want to borrow by following these steps

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Settle on a purchase price for your car

Calculate sales tax and add it to the purchase price

Deduct the trade-in value of your old car (if applicable)

Subtract and rebates or discounts

Subtract the downpayment you want to pay

Step 2: Apply the following formula to find the monthly payment

where

P = the principal amount

i = the interest rate per month, which equals the annual interest rate divided by 12

n = the total number of months

A = monthly payment to be paid

You can also use an easy online auto loan rate calculator to find out how much you have to pay.

How Can I Lower My Monthly Car Payment?

Build up a good credit score and consistent payment history before applying

before applying Always negotiate with the lender for a good APR

for a good APR If you’re already paying a high monthly amount, consider auto loan refinancing to a lower APR to a lower APR Consider refinancing your auto loan to a longer term so you can pay less every month so you can pay less every month Don’t have good enough credit to lower your payment? Try refinancing your loan with a co-signer Consider buying a used car (which costs less and will have lower monthly payments)

Frequently Asked Questions (FAQ)

What Is the Average Auto Loan Monthly Payment?

In the first quarter of 2022, the average auto loan monthly payment was $648 for new vehicles and $538 for used vehicles.

Is $500 Too Much for a Monthly Car Payment?

Paying $500 for a car loan monthly payment in 2019 would definitely have been too much. But in 2022, when the average monthly payment is $648, consider yourself lucky if you have just $500 to pay!

How Much Is Too Much for a Monthly Car Loan Payment?

Auto loan payments are calculated using several factors, including your credit score, the APR you’ve qualified for, the length of the loan term, and more. However, given the average rates and payments today, any amount above $600 can be considered too much to pay on your car loan. Here’s more info on top-rated airport parking, the best parking spots in your city, affordable auto insurance, easy auto refinance and high-quality car washes near you.

way.com - Average Monthly Car Loan Payments: How Much Should You Be Paying?

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