• Monthly car payments continue to reach record levels for both new and used cars.

• Interest rates on auto loans may continue to decline and could reach their lowest levels since 2023.

• The overall cost of car ownership remains high due to the high prices of insurance and car maintenance, in addition to the cost of a loan.

• Good credit scores are key to securing the best auto loan rates and walking away with a lower than average monthly payment.

Looking ahead to 2026, new car prices remain high, with monthly new car payments rising to the highest levels ever recorded. Amidst this environment, buyers are taking out ever-larger loans to make vehicle purchases, and some are also stretching repayments over longer terms, in some cases up to seven years.

Whether you have bad credit or want to refinance your current loanit’s important to understand the regular monthly fees and payments so you can be sure you’re getting the best deal. while auto loan rates in 2026 While they are projected to decline slightly, they won’t be enough to seriously affect the many factors that drive up the cost of car ownership, including the continued high cost of auto insurance and maintenance costs.

• The average monthly payment for a new car reached $772 in the fourth quarter of 2025, while used cars averaged a slightly lower $570, according to Edmunds.

• The share of new car payments over $1,000 has reached a record 20.3%, up from 18.9% at the end of 2024.

• This increase in monthly payment is partly due to the high cost of cars, with new car loans averaging $43,759 by the end of 2025.

• Longer loan terms are also becoming more common, with a fifth (20.8%) of new car loans being 84 months or longer.

• Banks are the most common choice for financing new and used car loans (31.30%), but credit unions (23.72%) and captive financing (18.98%) follow shortly after.

• The average cost of full coverage car insurance it’s about $225 a month for full coverage and $68 a month for minimal coverage.

The average monthly payment for new cars was between $700 and $800 in the third quarter of 2025, according to experience. Used cars had a smaller range, from around $500 to just over $550.

Source: Experian State of Automotive Finance Market, Q3 2025

Although the current average monthly payment for a new and used car is $748 and $532, respectively, car payments are based on more than just the cost of the vehicle. you can calculate your car payment depending on the amount you request, your annual percentage rate (APR) and the term of the loan.

Auto loan rates have a direct impact on the cost of your monthly car payment: if you qualify for a lower rate, your monthly car payment is lower, while higher rates increase your monthly payment amount.

Source: Experian State of Automotive Finance Market, Q3 2025

Finding a lower rate by shopping around with multiple lenders can be a more cost-effective way to lower your monthly payment. However, this can be a challenge if you have poor credit or a minimal credit history. comparing bad credit auto loan lenders can help you get a more competitive rate.

Average loan amounts do not correlate at all with car prices; because of down payments, people need to borrow less than the total cost of the vehicle. However, they have still seen a steady increase since 2022, driven in part by rising vehicle prices.

Source: Experian State of Automotive Finance Market, Q3 2025

Auto loans are usually available in 12 month increments from 24 to 96 months. The most common terms are 60 and 72 months, but 84-month terms are becoming more popular as vehicle prices rise.

Source: Experian State of Automotive Finance Market, Q3 2025

Discovering yours quote for a car loan it can be complicated. It’s tempting to think in terms of monthly payments, but low payments often mean longer terms, which increase the overall cost of your vehicle.

And remember, your vehicle will lose value as you make these payments. Depreciation results in a loss of up to 60%, according to Kelley Blue Book. The longer you keep making payments on a car, the more likely it is to become underwater or the reverse of your car loan.

Instead of monthly payments, determine the total amount you want to spend on a car, including expected insurance costs, maintenance and repairs. If you know how much you can spend, you can select a loan that fits your budget rather than letting one payment set your budget.

Compare rates: Shop the best auto loan rates to see your potential borrowing costs

Calculating the cost of your car gives you a better idea of ​​the monthly payment you can afford. To determine how much your vehicle will actually cost, you need to make some estimates.

1. Use Edmunds Car maintenance calculator to take into account the average cost depending on your vehicle.

2. Add the cost of car insurance. Some vehicles may have higher insurance premiums based on factors such as safety features and repair costs.

3. Calculate your estimated fuel costs using your car’s average miles per gallon, your estimated monthly mileage, and average fuel costs in your area.

4. Consider the registration fees and taxes you will have to pay, along with the depreciation of the vehicle.

Lower your monthly payments and the total cost of your purchase by making a down payment. according to data from Edmundsdrivers paid an average of $6,856 for new cars and $4,219 for used cars in the fourth quarter of 2024. If you have a trade-in, that would also count toward your down payment.

While auto loan rates are affected by many factors beyond your control, smart choices can put you in the driver’s seat when it comes to that big purchase. Current interest rates will make monthly payments more expensive, so be patient. Take the time to compare different rates and build your credit score to qualify best car loan rates.