Studying the latest car loan statistics before doubling down on your next car purchase could mean the difference between financial stability and bankruptcy. In this article, we’ll cover all the latest figures concerning average payments, loan rates, and credit scores you need to consider before taking your new baby out for a spin.
So far, so good? If so, then sit back and enjoy the ride!
10 Fascinating Facts & Car Loan Statistics for 2022
- 115.98 million was the total number of car loan accounts in the US in 2019.
- 85.5% of newly purchased vehicles in the US were financed in 2020.
- Electric and hybrid cars make 6.72% of vehicle financing.
- The used car dealer market industry is worth $153.1 billion.
- The US subprime auto loan market is worth $14.4 billion.
- American car loan debt represents 9.5% of the total US consumer debt.
- $568 was the average car payment in 2020 for new vehicles.
- In 2020, 30.2% of all US car loans were approved by banks.
- Borrowers with prime credit scores account for 43% of the total loan originations.
- Gen X has the highest average auto loan balance ($19,233).
Auto Loan Statistics in the US
What are the current interest rates for used and new cars, and how big is the car loan debt?
1. 115.98 million was the total number of car loan accounts in the US in 2019.
(Finder)
Not only that, but the number of car loan accounts has increased by a whopping 32.45 million since 2009.
In plain English, this is a 40% rise over the span of a single decade, and the numbers keep on growing. As such, they’re higher than they’ve ever been in US history!
2. How many new cars are financed? 85.5% of newly purchased vehicles in the US were financed in 2020.
(US PIRG) (Statista)
For comparison, in 2009, around 75% of new car purchases and 53% of used car sales were financed. Hence, we see that newly purchased cars had the most significant increase of the two.
3. What percentage of used cars are financed? 36.8% of used cars were financed in Q2 2020.
(Statista)
Not as many as the brand new cars, but it’s still quite a figure.
4. Electric and hybrid cars make 6.72% of vehicle financing.
(Experian)
Electric and hybrid cars are becoming more popular among consumers. Toyota is the ultimate winner when it comes to the largest market share of electric and hybrid vehicles (38.57%). Tesla takes second place (25.82%), followed by Honda (8.4%), Lexus (5.47%), and Ford (3.72%).
What percentage of electric cars are bought on finance? While in Q4 2016, electric and hybrid cars represented less than 3% of the financing, in 2020, they made 6.72% of vehicle financing.
Electric and hybrid cars also come with higher average monthly payments than gasoline cars, $689 and $529, respectively.
5. Based on the latest car loan data, the used car dealer market is worth $153.1 billion.
(IBIS World)
The used car dealers industry deals with selling, maintaining, and ensuring vehicles. The US used car market has been growing continuously between 2016 and 2021 (3.2% per year).
In a like fashion, in 2021, the car dealer market was expected to grow by 7.7%.
6. The total US auto loan debt in 2019 amounted to $1.29 trillion.
(Experian)
On that note, there was a 6% increase between 2019 and Q4 2020, amounting to $1.37 trillion. In other words, auto loan debt saw the smallest changes compared to other types of consumer debt.
For example, student loan balances experienced an increase of 9% (between 2019 and Q3 2020). In contrast, credit card debt went down by 14% during the same period.
7. Based on the car loan statistics, American car loan debt represents 9.5% of the total US consumer debt.
(Lending Tree)
When it comes to the distribution of American consumer debt, auto loans take third place, right after student loans (10.8%) and mortgages (a staggering 68.7%).
5.6% of consumer debt goes on credit card debt, while 2.5% goes on HELOC (home equity line of credit).
8. The current car loan interest rates for a 48-month new car amount to 4.18%.
(Bankrate) (Statista)
Vehicle loan interest rates change as we go. For example, in December 2018, the interest rates on auto loans amounted to 4.93%. Since then, the rates started dropping, reaching 4.77% in January 2019, 4.56% in January 2020, and 4.19% in January 2021.
As of July 2021, the auto loan interest rates for vehicles amounted to 4.18% for a 48-month new car and 4.50% for a 60-month new car.
That said, loans for new cars come with lower interest rates compared with used car loans because new vehicles have predictable resale value and lenders feel it’s less risky to sell them.
9. When it comes to used car interest rates, 4.50% is currently the average for a 36-month car loan.
(Bankrate)
While the price of used cars is considerably lower compared to new cars, used cars often come with higher interest rates because it’s harder to value them.
However, to get the lowest interest rates, you need to have an average credit score of 719 (new car) or at least 655 (used car). Fortunately, loans are possible to apply for even when your credit score is 600.
10. $568 was the average car payment per month in 2020 for new vehicles.
(Credit Karma)
In Q2 2020, the average monthly payment for a new car bought on loan for six years (72 months) was $568, whereas the average price for used vehicles was $397.
As for leased cars, the monthly payment was somewhere in between, averaging at $467 over the same period.
11. The average car loan amount for new vehicles is $34,635.
(Lending Tree)
At the same time, the average loan for used cars amounts to $21,438.
That said, new car buyers with a credit score range between 661 and 780 have the largest loans — $36,386 for new cars and $22,708 for used vehicles.
In contrast, new car buyers with credit scores between 300 and 500 have the lowest loans — $26,890 for new and $15,425 for used vehicles.
12. The average car payment 2020 stats show us there was an increase in car prices by 2% compared to 2019.
(Credit Karma)
Car payments are determined by two factors — principal and interest. The interest rate is usually affected by vehicle age, credit scores, and the lender. Credit score repair services may help you boost your ranking.
On that note, the average price for a new car in July 2020 amounted to $38,378. This was a 2% increase compared to the same period in 2019. The prices of monthly car payments also witnessed a rise.
13. In 2019, the average down payment on a car was around 11.7%, for both new and used purchases, according to average car payment stats.
(Edmunds)
This sum is nothing to sneeze at, given that new cars have increased in value (by a whopping 33%). Hence, the average down payment on a vehicle is actually up by 9% since 2007.
14. The US subprime auto loan market is worth $14.4 billion.
(IBIS World)
The market is expected to grow by an additional 0.7% during 2021, given that it already witnessed a growth of 1.2% per year between 2016 and 2021.
It’s also worth mentioning that the subprime auto loans industry managed to grow much faster than the economy overall due to aggregate household debt and new car sales that are expected to go up in 2021.
Auto Loan Origination Statistics
What can we learn about auto loan originations among US consumers?
15. In 2020, 30.2% of all US car loans were approved by banks.
(Statista)
According to loan origination data from 2020, banks had the second-largest percentage, right behind captive financing, which is responsible for 31.1% of US car loans.
Credit unions made 18.7%, followed by a finance company (12.4%) and BHPF (7.6%).
16. Car debt in America accounted for 5.5% of the national GDP in 2019.
(US PIRG)
Meaning, it had a higher value than at any other time in history, not counting the recession periods of 2001 and 2007.
17. Car loan statistics reveal that borrowers with prime credit scores account for 43% of the total loan originations.
(Experian)
Another 20% belongs to super-prime borrowers. In contrast, subprime borrowers make 16%, together with deep subprime borrowers (2%).
The stats also show us there was a slight increase in balance (compared to 2019) among consumers with scores between 300 and 579 (by 1%), 580 and 669 (by 3%), 670 and 739 (by 3%), and 740 and 799 (by 4%).
19. Recent car loan facts show that captive financing accounted for 54.8% of the US auto finance market for new cars in 2019.
(Experian)
While banks dominate the total car-loan market, captive financing is more focused on new car loans, representing more than half of its shares.
Following data from Q2 2019, banks take second place in the new car loans market, contributing with a 28% market share.
Car Loan Statistics: Debts & Trends
Which generation has the highest car debt, and what’s the ideal debt to income ratio?
19. Gen X has the highest average auto loan balance ($19,223).
(Lending Tree)
Gen X is more likely than other generations to have large loan balances and auto debts.
For example, their average auto loan balance, which amounts to $19,233, is larger than the average auto loan balance of:
- Boomers ($16,850)
- millennials ($16,658)
- Gen Z ($14,620) and
- Silent Gen ($13,203).
20. In Q1 2020, 5.1% of all car loan balances were delinquent for more than 90 days.
(The Balance)
Compared to the auto loan delinquency statistics from 2019, this was an increase of 0.46%. It also marked the second-highest percentage since 2010, when delinquency rates reached 5.27% owing to the Great Recession.
Why are delinquency rates so high? Because more and more consumers are ready to take on car loans. Furthermore, there is a large number of subprime borrowers that are at a higher risk of lagging.
21. The debt to income ratio for a car loan should not exceed 40%, including all other expenses.
(Car Loans of America) (Experian)
Personal finance statistics show that the totality of your monthly debt expenses, including your average monthly payment, car insurance, mortgage, and other housing expenses, should not be over 40% of your income.
22. How many cars are repossessed each year? About 2.2 million vehicles.
(Title Loanser) (The Balance) (eTags)
The yearly repossession rate amounts to a staggering 65%.
In other words, there are 226 car repossessions per hour, i.e., 5,418 repossessions per day. For every 2.4 new vehicle purchases, there is one car repossession.
Car repossession happens when a borrower gets behind with the payment. The lenders can take the borrower’s car even without warning. In some cases, lenders disable borrower’s vehicles through remote control.
23. The average car loan length for a new car reached a record high of 70.6 months.
(Statista) (Statista) (Edmunds)
The above figure refers to Q1 of 2020. In Q2, the car loan length for used cars was longer than for a new car.
FAQs
What percentage of people have car loans?
Based on the latest statistics, 62% of American adults have a car loan. In a like manner, the total auto debt reached a record of $1.37 trillion in the period of 2019 and Q4 2020.
Moreover, car loan debt represents 9.5% of the overall consumer debt in the US, right behind student loans and mortgage loans.
What is the average monthly car payment in the US?
As of Q2 2020, the average monthly payment for a new car bought on loan for more than six years (72 months) is $568, whereas the average monthly cost for used cars purchased with the same loans is $397.
As for leased cars, the monthly payment averaged $467 for Q2 2020.
What is a good rate for a car loan?
While the average car loan interest rate in the US amounts to 5.27% for 60 months loans, individuals need to consider a few essential factors — the lender, the credit score, and the length of the loan.
For example, individuals with a credit score lower than 579 will have the highest average rate for new and used cars, 14.39% and 20.45%, respectively.
People with high credit scores (over 720) will have the smallest average rates, 3.65% for new and 4.29% for used cars.
What is the average car loan amount?
The car loan amount is $34,635 for new cars and $21,438 for used vehicles. New car buyers in the prime credit tier (661 to 780) have the largest loans — $36,386 on average. That same group also borrows the most for used cars ($22,708).
How many car loans can I get in 2022?
Although you can technically have a maximum of two car loans at once, this is not going to be an easy task.
First of all, you might not be able to qualify for a second loan. Secondly, lenders might reject your loan if you don’t have a good income. And lastly, you need to have a good or excellent credit score to get the lowest APR.
Why you should never get a car loan?
There are many good reasons why you should avoid auto loans, especially when it comes to long-term car loans:
- You’ll pay higher interest rates.
- You’ll have to make loan payments every month for a long time (even if you lose a job).
- You won’t be able to use the warranty for repair and parts because it usually lasts 3-5 years.
What percentage of cars are financed in the UK?
UK consumers bought 922,720 new and 1.489.12 million used cars using finance in 2020.
On the other hand, in the same period, businesses used finance to purchase 55,450 used and 421,840 new cars.
The major lenders in the UK are Barclays Partner Finance, Black Horse (Lloyds Banking Group), Close Brothers Motor Finance, Hitachi Capital, and MotoNovo.
What percentage of cars are financed in the US?
Based on the latest statistics, 85.5% of new and 36.8% of used cars are financed. Furthermore, 6.72% of hybrid and electric vehicles were also financed in 2020.
Conclusion
Riding with style might end up costing you a lot if you don’t consider the optimal rates and the optimal duration of your car loan.
Given the rise in delinquency and repossession rates of car loans, which were present even before the notorious coronavirus outbreak, one can conclude that it is a good time to re-evaluate new car payment methods.
This is precisely where the latest car loan statistics come in handy, as you can use them as a guide for finding the perfect financial solution for your new vehicle.
Sources:
- Bankrate
- Business Insider
- Car Loans of America
- Credit Karma
- Edmunds
- Edmunds
- eTags
- Experian
- Experian
- Experian
- Experian
- Experian
- Finder
- Finder
- Globe Newswire
- IBIS World
- IBIS World
- Lending Tree
- Statista
- Statista
- Statista
- Statista
- Statista
- Statista
- Statista
- The Balance
- The Balance
- Title Loanser
- US PIRG
- ValuePenguin
