Car Payments Are Now The New Mortgage As Certain Americans Encounter 100-Month Loans | Carscoops

      Experian’s recent data shows a sharp rise in interest rates and longer loan terms as car buyers try to manage their monthly budgets in order to keep owning vehicles.

      21 hours ago

      by Brad Anderson

      New data indicates that the average monthly payment for a new car has reached $748.

      For used car loans, the monthly average stands at $532 with an interest rate of 11.4%.

      Some Americans are now opting for car loans lasting as long as 100 months.

      Car buyers in the U.S. are encountering one of the priciest markets in recent history, with data illustrating just how challenging this situation has become.

      Over 80% of new car buyers needed to finance their vehicle purchases, and last quarter, the average monthly payment was a staggering $748. New information from Experian highlights the significant financial strain car ownership can impose, even for those choosing used cars.

      Recent reports show that the average price of new vehicles has increased dramatically over the past five years, with transaction prices rising by more than 30% since 2020. In September, it was noted that this average price surpassed the $50,000 mark for the first time ever. This rise in prices has altered monthly payment amounts even before considering interest rates.

      Current Trends in Auto Loans

      The latest data from Experian addresses average auto loans for the third quarter, comparing new and used vehicles across the U.S. A standard new car loan averages $42,332, with buyers paying about $748 monthly and facing an interest rate of 6.56%.

      Even a 1% shift in interest rates can significantly influence monthly payments. For a $40,000 loan with a 72-month term, that change typically affects payments by about $20 to $25 either way.

      Trends with Loan Duration

      Moreover, the situation is even more concerning. As reported, in an effort to cope with increasing prices, buyers are extending loan terms significantly beyond usual standards. Loans of 72 months, or six years, are becoming the norm, with an increasing number extending beyond 84 months, or seven years, and some even reaching 100 months, which equates to more than eight years.

      While lengthening a loan can reduce monthly payments, it simultaneously causes the total cost to increase significantly. For instance, a $40,000 loan over eight years might lower monthly costs by a few hundred dollars, but will add thousands in interest over the loan's duration.

      Used Car Financing and Payment Trends

      As anticipated, the monthly payments for used vehicles tend to be lower, though the interest rates are considerably higher. The average monthly payment for a used car is $532, with loan amounts around $27,128 and average interest rates of 11.4%.

      The loan terms for used cars are comparable to those for new cars, with the average duration being slightly under 67 months. Conversely, only 35.48% of used car buyers financed their purchases last quarter.

      Averages for Auto Loans

      Source: Experian data as of Q3 2025

      Credit scores also play a crucial role in determining average monthly payments. For new cars, borrowers with excellent credit scores (between 781 and 850) have average payments of $727, while those classified as prime (between 661 and 780) face payments of $754.

      Interestingly, the data indicates that borrowers with deep subprime credit scores (ranging from 300 to 500) report lower average monthly payments of $748. However, this figure does not provide the entire picture.

      These borrowers typically take on smaller loan amounts, which accounts for the lower payments. For example, while a prime borrower finances an average of $44,480 for a new car, the average loan amount for a deep subprime borrower is just $35,286.

      Additionally, those with poor credit scores tend to incur much higher interest rates. Whereas the average interest rate for a super prime borrower was 4.88% last quarter, it was 9.77% for a near-prime borrower with scores between 601 and 660, and a staggering 15.85% for a deep subprime borrower.

      Average Auto Loan Payment by Credit Score

      Source: Experian data as of Q3 2025