Car Loan Statistics 2024: Key Trends, Payment Insights, and Interest Rate Impacts
Barry Elad
Updated · Nov 30, 2024
The process of buying a car has evolved into a significant financial decision for many Americans, with loans being the primary method for financing these purchases. Over the past decade, the auto loan market has witnessed rapid growth due to rising vehicle costs, low interest rates, and a consumer shift toward financing. Whether you’re a first-time buyer or someone looking to refinance an existing car loan, understanding the key statistics behind this market can help you make informed decisions.
In 2024, the dynamics of car loans are influenced not only by economic factors but also by consumer behavior and trends in vehicle pricing. Let’s dive into the essential stats and trends that are shaping the car loan industry today.
Editor’s Choice: Key Car Loan Statistics
- The total auto loan market size in the U.S. reached an astounding $1.55 trillion in 2023, marking a 3% increase from the previous year.
- Auto loan originations hit $182 billion in Q2 2023, with new vehicle financing leading the charge.
- The average monthly payment for a new car hit an all-time high of $725 in early 2024.
- Subprime borrowers (with credit scores below 620) accounted for 22% of new car loans in 2023.
- Interest rates for auto loans averaged around 6.5% in 2023, up from 4.2% in 2022, reflecting inflationary pressures.
- Electric vehicle (EV) financing has surged, with a 65% year-over-year growth as of 2023, driven by increased consumer interest and government incentives.
- Delinquency rates (over 90 days past due) on auto loans were 2.37% in 2023, up slightly from 2.14% in 2022, signaling potential risks in the market.
Growth and Market Share
- The auto loan market grew by 4.5% annually over the past five years, reaching $1.55 trillion in 2023, highlighting the consistent demand for vehicle financing.
- In 2023, used car loans accounted for 61% of total auto loan originations, a testament to the rising popularity of pre-owned vehicles among budget-conscious buyers.
- New car loan balances represented 39% of the total market, underscoring the ongoing demand for newer models despite their higher costs.
- Auto loan refinancing grew by 14% in 2023 as consumers sought to lower their monthly payments amidst rising interest rates.
- Leasing as an alternative to loans still plays a key role, representing 29% of all vehicle financing options in 2023.
- The top five auto lenders in the U.S. – including Ally Financial and Capital One Auto Finance – collectively hold over 50% of the market share in auto loan originations.
- Dealership financing remains dominant, with 65% of all car loans initiated through dealerships, although online lenders are slowly gaining traction with 21% of new loan originations in 2023.
Average Monthly Car Payments for New Vehicles
- The average monthly payment for new cars in the U.S. surged to $725 in early 2024, up from $702 in 2023. This represents the highest average ever recorded.
- For used vehicles, the average monthly payment increased to $528 in 2024, compared to $516 in the previous year.
- Electric vehicle payments continue to rise, with the average monthly payment for an EV now at $842, driven by higher upfront costs and interest rates.
- Luxury vehicle payments stand at an average of $1,024 per month, showing a steep rise due to increasing interest rates and inflation.
- In 2023, SUVs and trucks led the charge with average payments of $800 per month, reflecting their continued popularity in the U.S. market.
- Payments for subprime borrowers averaged $579 in 2023, significantly higher than prime borrowers who averaged around $680 per month.
- Leased vehicles saw monthly payments average at $532 in 2023, lower than financed vehicles due to the shorter loan terms and different financial structure.
| Vehicle Type | Average Monthly Payment |
| New Cars | $725 |
| Used Cars | $528 |
| Electric Vehicles | $842 |
| Luxury Vehicles | $1,024 |
| SUVs and Trucks | $800 |
| Subprime Borrowers | $579 |
| Prime Borrowers | $680 |
| Leased Vehicles | $532 |
Auto Loan Interest Rates
- The average interest rate on new car loans hit 6.5% in 2023, up from 4.2% in 2022, primarily due to rising inflation and the Federal Reserve’s rate hikes.
- Used car loan rates have also increased, with the average interest rate reaching 9.2% in early 2024, compared to 7.5% in 2022.
- Subprime borrowers faced much higher rates, averaging 11.2% for new car loans and 15.9% for used car loans in 2023.
- Prime borrowers (credit scores above 660) secured more favorable rates, with averages of 5.2% for new cars and 6.8% for used vehicles.
- Credit unions continue to offer lower rates compared to traditional banks, with average rates at 5.5% for new cars and 7.8% for used vehicles in 2023.
- Online lenders are increasingly competitive, offering interest rates as low as 3.9% for prime borrowers, though their rates for subprime customers often exceed 13%.
- Variable-rate auto loans, though less common, saw an average increase of 1.5% in 2023, as economic conditions tightened.
States with the Highest and Lowest Car Loan Balances
- Texas leads the nation with the highest average car loan balance of $37,800 in 2023, reflecting the state’s preference for larger, more expensive vehicles like trucks and SUVs.
- California follows closely, with an average car loan balance of $36,400, driven by the state’s high cost of living and vehicle preferences.
- Florida ranks third, with an average balance of $34,500, a significant rise due to increased vehicle costs and financing needs.
- On the lower end, Michigan has one of the lowest average balances, standing at $19,200 in 2023, partly due to the local economy and a preference for used vehicles.
- Iowa also features among the lowest, with an average balance of $21,300, reflecting more conservative borrowing patterns.
- New York saw a 9% increase in loan balances in 2023, bringing the average balance to $33,200, influenced by the state’s high population density and rising vehicle costs.
- Alaska reported the lowest overall increase in balances, growing by just 3% in 2023, with an average balance of $22,100.
With rising car payments and varying interest rates, it's clear that geographical location and credit scores play critical roles in shaping the cost of auto loans across the U.S. These insights offer a glimpse into how different factors influence the car loan landscape.
Consumer Demographics and Borrowing Behavior
- Millennials (born between 1981 and 1996) represented 42% of all auto loan borrowers in 2023, solidifying their status as the primary drivers of the auto loan market.
- Gen Z borrowers (born after 1996) have grown rapidly in the market, making up 15% of all new car loan applications in 2023, a 5% increase from the previous year.
- Baby Boomers (born between 1946 and 1964) accounted for 25% of auto loan originations in 2023, showing steady participation despite an aging population.
- Women are increasingly taking on car loans, with 54% of car loan applications in 2023 being from female borrowers, compared to 46% from males.
- Minority groups, particularly Hispanic and African-American borrowers, saw an 8% increase in car loan applications in 2023, reflecting growing accessibility to credit and vehicle financing.
- Borrowers with annual incomes below $50,000 represent 35% of all car loan originations, highlighting the widespread need for financing across income brackets.
- First-time car buyers accounted for 17% of all auto loans in 2023, showing that car ownership remains a major milestone for many Americans.
Auto Loan Delinquency Rate
- The auto loan delinquency rate for loans past due over 90 days rose to 2.37% in 2023, up from 2.14% in 2022, reflecting tighter economic conditions and inflation.
- Subprime borrowers showed a delinquency rate of 7.4% in 2023, a significant jump from 6.8% in 2022, driven by rising living costs and higher loan payments.
- Prime borrowers (with credit scores above 660) maintained a much lower delinquency rate, averaging 0.9%, a slight uptick from 0.8% in 2022.
- Urban areas reported higher delinquency rates, with cities like Detroit and Atlanta seeing delinquency rates above 5% in 2023.
- Rural regions maintained lower delinquency rates, averaging 1.7%, which suggests that rural borrowers are more conservative in their borrowing practices.
- Credit unions reported a delinquency rate of 1.2% for auto loans in 2023, significantly lower than the 2.7% reported by traditional banks.
- Auto repossessions also rose by 9% in 2023, reflecting growing financial pressure on households struggling to keep up with payments.
Impact of Economic Factors on Car Loans
- Inflation played a major role in the auto loan market, with the cost of new cars rising by 6% in 2023, making financing a necessity for many buyers.
- The Federal Reserve's rate hikes throughout 2023 directly impacted auto loan interest rates, leading to a 2.3% increase in the average interest rate by year-end.
- Unemployment rates remained low at 3.6% in 2023, but the threat of a recession caused 20% of borrowers to delay their vehicle purchases until 2024, according to a consumer survey.
- Gas prices stabilized in 2023, helping alleviate some financial stress for car owners, though high maintenance costs continued to strain many households.
- Government incentives for electric vehicles contributed to a 40% increase in EV financing, as buyers took advantage of tax credits and lower fuel costs.
- The U.S. economy showed resilience, but economic uncertainty prompted 12% of borrowers to refinance their loans in 2023, seeking lower monthly payments amid fears of future rate increases.
- Vehicle prices for popular models such as trucks and SUVs remained high, pushing the average loan amount for new vehicles to $40,000 in 2023, an increase of 5.8% from 2022.
Technological Innovations in Car Loan Processing
- Online car loan applications surged by 38% in 2023, driven by consumers' preference for convenience and the expansion of digital lending platforms.
- Artificial intelligence (AI) is playing a growing role in loan approval processes, with 65% of auto lenders using AI to assess risk and approve loans within minutes.
- Blockchain technology is being tested by 3 major auto lenders to streamline the documentation process, reducing loan approval times by up to 30%.
- Digital signatures and electronic document submissions have become the standard, with 75% of all auto loans now completed entirely online.
- Fintech companies are gaining market share, with platforms like Upstart and Carvana seeing a 15% increase in loan originations in 2023.
- Mobile apps are becoming integral to the car loan management process, with 70% of borrowers using apps to track payments and view loan details.
- Buy Now, Pay Later (BNPL) options are emerging in car financing, with 4% of auto loans in 2023 offering BNPL terms for specific vehicle purchases, appealing to younger borrowers.
Recent Developments
- Electric vehicle (EV) financing saw record growth in 2023, with an increase of 65% in loan originations for EV purchases, spurred by federal tax incentives and growing environmental awareness.
- Car leasing is making a comeback, with 30% of all vehicle financing in 2023 opting for lease agreements, up from 27% in 2022.
- Online vehicle financing platforms such as Carvana and Vroom expanded their market share, with 21% of all vehicle loans in 2023 originating online.
- Subprime lending tightened, with fewer lenders willing to approve loans for borrowers with credit scores below 620, leading to a 5% decline in subprime loan originations.
- Autonomous vehicle technology is attracting interest from lenders, as auto financing companies explore new insurance and loan products for self-driving cars.
- Green loans, specifically for electric and hybrid vehicles, accounted for 15% of all auto loan originations in 2023, reflecting the growing demand for sustainable vehicle options.
- The U.S. Treasury's new guidelines for auto loan tax deductions, introduced in 2023, provided financial relief to self-employed individuals using vehicles for business purposes.
Conclusion
The car loan market continues to evolve, influenced by economic factors, technological advancements, and shifting consumer preferences. In 2023 and 2024, rising interest rates, increasing vehicle costs, and the demand for electric vehicles are shaping the landscape of auto financing. Borrowers are becoming more reliant on digital tools and innovations like AI-powered loan processing, while lenders adjust to the growing complexities of the market. As economic uncertainty looms, staying informed about trends and rates will be crucial for consumers and lenders alike.
Sources
Barry Elad
Barry Elad is a dedicated tech and finance enthusiast, passionate about making technology and fintech concepts accessible to everyone. He specializes in collecting key statistics and breaking down complex information, focusing on the benefits that software and financial tools bring to everyday life. Figuring out how software works and sharing its value with users is his favorite pastime. When he's not analyzing apps or programs, Barry enjoys creating healthy recipes, practicing yoga, meditating, and spending time in nature with his child. His mission is to simplify finance and tech insights to help people make informed decisions.
