Average new car payment just hit a record $700 a month: Here's how to lower that price (2024)

FAQs

Average new car payment just hit a record $700 a month: Here's how to lower that price? ›

Experts suggest you: Put down a larger down payment, if you can afford to. Otherwise, look at a cheaper car. You can still get a mid-size crossover in the $40,000 price range, which should keep your monthly payment down to $500 to $600.

In general, it's recommended to spend no more than 10% to 15% of your monthly take-home income on your car payment, and no more than 20% on your total vehicle expenses, including insurance and registration.

Make a larger down payment

The larger your loan, the higher your monthly payment will be. You can reduce the amount you need to borrow by increasing your down payment. If you can't afford to make a large down payment, consider saving up before purchasing your next vehicle. Learn more about down payments on a car.

A $750 monthly car payment is a tough expense to keep up with. But if you're careful with budgeting and boost your income as needed, you might manage to swing those payments just fine. And if you're able to reduce what you're spending on auto insurance, even better.

According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn't your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.

How much should I spend on a car if I make $60,000? If your gross salary is $60,000, your take-home monthly pay is probably around $3,750, assuming about 25% of your pay goes toward taxes and other expenses. Based on the 10-15% calculation, you should spend no more than $562.50 on a monthly car payment.

Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go.

By the end of one year of making biweekly payments, you will have made the equivalent of 13 payments on your loan instead of just 12, which helps reduce the principal on your debt even faster. It helps move you toward an early payoff date without significantly increasing the amount you put toward your loan each month.

Car payment statistics

The average monthly car payment for new cars is $738. The average monthly car payment for used cars is $532. 42.30 percent of vehicles financed in the fourth quarter of 2023 were new vehicles.

Can I ask my car lender to lower my rate? ›

Yes, just like the price of the vehicle, the interest rate is negotiable. Dealers may not offer you the lowest rate that you qualify for. To get the best interest rate, shop around with multiple lenders and negotiate.

In addition to the price of the vehicle, there are the terms and costs of the auto loan that you may be able to negotiate or control. Together, these amounts can impact your monthly payments and lower your total costs, which could allow you to save a significant amount over the life of the loan.

Paying extra on the principal won't lower your monthly car payment, but it does provide other benefits.

The average car payment for new vehicles hit a record high of $738 a month in the fourth quarter of 2023, according to an analysis from LendingTree. If that's too rich for your blood, there are plenty of better ways to spend that money and still get around.

What car can I buy for $700 per month? A $35000 car has a monthly payment of $700 for 5 Years at a 7.42% interest rate. Check the payment with tax and tags. A $45755 car is $700 per month at 7.42% APR for 7 Years.

The average new car payment has just hit $700 a month, with some paying $1,000. Some ways to lower that price. Remember just a few years ago when a car loan was $300 a month? Now, unless you put down a huge down payment, those days are gone forever.

A $30,000 auto loan balance with an average interest rate of 5.0% paid over a 6 year term will have a monthly payment of $483. In total, the loan will cost $34,787 with $4,787 in interest.

Experts say your total car expenses, including monthly payments, insurance, gas and maintenance, should be about 20 percent of your take-home monthly pay. For non-math wizards, like me – Let's say your monthly paycheck is $4,000. Then a safe estimate for car expenses is $800 per month.