Average Used Car Payment Is Now a Whopping $520 Per Month: Edmunds
The average loan term has also increased to 70 months.
As data piles in from the fourth quarter of 2021, it looks like used car buyers are handing over more money than ever on their monthly payments. Amid continued new vehicle shortages, Americans are flocking towards the used market, even if it means doing so at a drastically inflated price. Numbers from Edmunds show just how sky-high these totals are projected to be.
According to the firm's figures, the average used car buyer is expected to break a record by spending $520 per month on their vehicle during last year's Q4.
Edmunds data for the same period in 2020 shows an average monthly payment of $437, representing a not-insignificant increase of $83 per month. It also shows that the average loan term has increased from 68.1 months to 70 months, meaning used car buyers are paying more over longer periods of time.
These projected figures show an average total transaction price of $33,397, of which $29,913 is financed. Compared to Q4 2020, the average down payment has only slightly increased from $3,280 to $3,484, or roughly six percent. Meanwhile, the average amount financed has increased by 23 percent, up from $24,384. It appears as if Americans are still heavily relying on financing the total purchase price with nearly the same amount out of pocket at the time of purchase.
New car payments are up, too, as they're expected to have increased 9.5 percent in Q4 2021. The average new car buyer is spending approximately $636 per month, according to Edmunds, which is the highest number it has ever recorded.
Although the average transaction price per vehicle is increasing, Edmunds analysts believe that doesn't tell the whole story. Part of it can be attributed to luxury car buyers who have financed their newest vehicle rather than leasing it.
"Leasing and luxury historically have gone hand in hand, but that trend is drifting away as automakers have less reason to incentivize leasing amid inventory shortages," said Edmunds' Executive Director of Insights, Jessica Caldwell. "Affluent luxury shoppers are likely feeling comfortable with financing their pricey purchases instead since interest rates are so low."
There is one piece of good news, though: interest rates are lower, on average, whether you plan on buying a new or used car. For used vehicles, the average APR has decreased from 7.8 to 7.4 percent, and from 4.6 to 4.1 percent for new car buyers. Even so, the auto industry isn't exactly a buyer's market right now.
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