Yes, it’s easy to get a brand-new car, but even easier to get into long-term debt when loaning money to buy it. By reading about the most relevant car loan statistics, you should get enough info to make a wise decision next time you’re choosing your new vehicle.
So, with your best interest in mind, this article focuses precisely on that. Keep scrolling to see what we’ve prepared for you!
Top 10 Car Loan Statistics to Warm You Up
- Globally, the car finances industry is projected to reach about $2.3 billion by 2027.
- On average, 3%–10% is the annual percentage rate range for car loans.
- In 2019, the average car loan length for new vehicles was 69 months.
- In January 2021, a new car cost an average of $40,857 in the US.
- At the end of 2020, the average car payment in the US was $563 a month.
- The ‘buy here, pay here’ financing option is the least preferred one among borrowers.
- In 2020, 25.5% of surveyed banks in the US recorded a drop in interest in loans.
- In Q1 2021, the average interest rate for brand new cars was 4.12%.
- Last year, 25.5% of surveyed banks in the US recorded a drop in interest in loans.
- In Q2 2020, Honda was the most leased brand with a market share of 13.6%
General Auto Loan Statistics
1. 5.27% is the national average in the US for car loan interest rates on 60-month loans.
However, it’s important to mention that the numbers vary for individual clients. More precisely, they depend on one’s credit score, a given car’s age, loan term length, and other factors.
2. Car loan data reveal that on average, 3%–10% is the annual percentage rate range for these loans.
Moreover, Americans with credit scores of at least 760 are seen as prime loan applicants and have a high chance to be approved for interest rates as low as 3%. On the flip side, consumers with scores lower than 760 typically pay significantly higher interest rates—up to 20%.
3. Consumers in the median credit score range can expect auto loan interest rates of about 5.27%.
Typically, consumers with superb credit profiles finance interest rates under 4.21% (which is the 60-month average). On the other hand, individuals with less impressive credit scores end up with much higher rates. The median credit score of US consumers who get approved for auto loans is 711.
4. At the end of 2020, the average car payment in the US was $563 a month.
According to the newest stats on car loan interest rates, this amount is $21 bigger than it was at the end of 2019. In other words, consumers are paying more monthly for both new and used cars.
However, these digits don’t paint the whole picture. Though monthly payments seem to be increasing, the opposite goes for car loan interest rates. For example, between Q4 2019 and Q4 2020, the average interest rate dropped by 0.94%—from 5.25% to 4.31%.
5. Car loan statistics for 2021 reveal that in Q1, the average interest rate for brand new cars was 4.12%.
For used cars, however, the average rate was more than double, reaching 8.7%. Furthermore, interest rate trends indicate that longer loan terms tend to come with higher rates.
Logically speaking, this isn’t too surprising. Individuals requesting longer terms are generally considered higher-risk customers by lenders. This especially applies to clients in need of 60-month or longer car loans.
6. During the pandemic, US car loans totalled at a whopping $1.37 trillion.
A study from 2019 revealed that more and more people are taking out auto loans. According to the numbers, the total debt in 2010 was $677 billion, and the year before the pandemic, it reached $1.29 trillion.
7. Typical car payment stats reveal that in January 2021, a new car cost an average of $40,857.
In fact, this sum is 5.45% higher than a year ago, implying a difference of $2,110. However, the last quarter of 2020 was marked by an even higher sum—$41,152. So it seems that in the US, the average transaction price of a new light vehicle has been gradually decreasing.
8. According to car loan data for 2020, 85.5% of new vehicles were bought with a lease or loan.
Moreover, the percentage of new financed cars that year was lower than the percentage of used ones. Used cars made up 59.3% of all cars that were financed through loans or leases, while new vehicles reached 40.8%.
9. In 2019, the average car loan length for new vehicles was 69 months.
(Car and Driver)
The average car loan for second-hand cars was somewhat shorter—65 months. The majority of auto loans last between 2–8 years, and the most typical terms are 24, 36, 48, 60, 72, and 84 months.
10. Compared to people in their thirties, borrowers younger than 30 have a 50% higher likelihood of defaulting on their car loan.
Based on auto loan delinquency statistics from 2020, young people are struggling to finance their vehicles. Borrowers in their thirties are 50% more likely to fail to make regular payments and fall into debt delinquency than people in their forties.
Stats on the Car Loan Industry
11. Globally, the car finances industry is forecasted to reach approximately $2.3 billion by 2027.
Compared to 2019, that’s a $1 billion growth expected to happen at a CAGR of 14.3%. Experts explain this boost through increased average vehicle prices, as well as a growing demand for cars.
12. Car loan facts indicate that the ‘buy here, pay here’ financing option is the least preferred one among borrowers.
What does “buy here, pay here” mean? Basically, you buy a vehicle and lend the money for it from the same source. It seems like a convenient solution for those who don’t want to deal with multiple parties.
However, auto dealerships offer the highest interest rates, according to car loan debt stats. Not only that, but car dealerships frequently add in extra fees and the fine print can sometimes contain startling regulations or rules.
13. Last year, 25.5% of surveyed banks in the US recorded a drop in interest in loans.
Auto loan statistics derived from a Federal Reserve survey including 74 banks clearly show 2020 as an all-time low. In fact, only 7.3% of the surveyed banks reported a subtle increase in clients’ interest in auto loans.
14. In 2018, the car loan debt balance per capita in Texas was $6,700, according to stats on car debt in America.
This state had the highest amount of car loan debt across America, followed by Los Angeles with $5,700. Georgia and New Mexico came in third with $5,400. On the flip side, the lowest debt balance per capita was recorded in the District of Columbia—$3,000.
15. In Q2 2020, the Honda Civic was the most leased model in the US with a market share of 4.5%, based on car loan statistics…
The Honda CR-V came in second at 2.8%, followed by the Toyota RAV4 with 2.7%, and the Honda Accord and the Ram 1500 both at 2.3%. Other popular models included the Chevrolet Equinox, the Ford F150, the Jeep Grand Cherokee, the Ford Explorer, and the Toyota Tacoma.
16. … and Honda was the most leased brand with a market share of 13.6%.
Auto loan and lease statistics unambiguously placed Honda at the top of the list of most leased car brands. It was followed by Toyota (9.7%), Chevrolet (8%), Ford (7.8%), Nissan (5.8%), and Jeep (5.8%).
What percentage of people have car loans?
As data suggests, more than 100 million US citizens had car loans in 2019. This means that approximately 44% of Americans turned to car loans as a way to finance their cars.
What is the average car loan amount?
In Q3 2020, the average car loan on brand new vehicles reached the sum of $34,635. With second-hand cars, the average loan equaled $21,438.
Furthermore, these numbers imply significant YOY increases. In Q3 2019, the average loan on new cars was $2,000 lower, while on used cars it was $945 lower compared to Q3 2020.
Is an 84 month car loan bad?
All in all, experts don’t recommend an 84-month car loan. This might seem strange, as previously 60-month or five-year loans were seen as lengthy, but at the beginning of 2019, over 60% of new auto loans had longer terms.
Although an 84-month car loan length can reduce monthly payments, it also has downsides—for instance, you’re going to pay more interest. Longer loans are usually targeted at customers with less impressive credit scores. Consequently, both new and used car interest rates with 7-year loans are frequently higher than with 3- or 5-year loans.
Another factor to take into account is vehicle depreciation. By the end of the seven-year period, the value of your new car could drop so much that you may end up owing more than what your vehicle’s worth at that point.
Approximately 7% of Americans who are in debt don’t think they will ever be able to completely pay off what they owe. This is yet another reason for you to make smart financial decisions.
With the ever changing economic climate, the number of loan options is growing to accommodate clients’ diverse financial profiles. We hope that from these car loan statistics, you’ve been able to get a clearer picture of what those options are and seriously weigh out their pros and cons before making a final decision.
If you like what we’ve shared with you in this article, make sure to check out our piece on the most intriguing car statistics.