Car Loan Statistics 2025: Key Trends, Payment Insights, and Interest Rate Impacts
Updated · May 06, 2025
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 2025, 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
- As of Q3 2024, the total outstanding auto loan debt in the U.S. reached $1.53 trillion, reflecting a 1.5% year-over-year increase.
- Auto loan originations in the U.S. totaled $175.1 billion, with new vehicle financing leading the charge.
- The average monthly payment for a new car reached $742 in the fourth quarter of 2024.
- Subprime borrowers (with credit scores below 620) accounted for approximately 16% of new car loans.
- Interest rates for auto loans averaged 6.35% for new cars and 11.62% for used cars.
- Electric vehicle (EV) financing experienced over 30% year-over-year growth, driven by increased consumer interest and government incentives.
- Delinquency rates (over 90 days past due) on auto loans rose to 4.83% in Q4 2024, reflecting a 15.8% year-over-year increase.
Auto Loan Distribution by Lender Type
- 57.8% of new vehicle loans came from dealer (captive) financing.
- 24.8% of new loans were financed by banks.
- 9.4% of new loans came from credit unions.
- 5.9% of new loans came from finance companies.
- 2.1% of new loans were through buy-here, pay-here dealers.
- 28.7% of used vehicle loans were financed by banks.
- 27.5% of used loans came from credit unions.
- 19.9% of used loans were financed by finance companies.
- 16.1% of used loans came from buy-here, pay-here dealers.
- 7.9% of used loans came from dealer (captive) financing.
- 30.0% of total auto loans came from banks.
- 22.3% of total loans came from dealer (captive) financing.
- 22.0% of total loans came from credit unions.
- 15.3% of total loans came from finance companies.
- 10.5% of total loans came from buy-here, pay-here dealers.
Auto Loan Interest Rates
- The average interest rate on new car loans hit 6.5%, primarily due to rising inflation and the Federal Reserve’s rate hikes.
- Used car loan interest rates have increased, with the average interest rate reaching approximately 11.62%.
- Subprime borrowers faced much higher rates, averaging 11.2% for new car loans and 15.9% for used car loans.
- 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.
- 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%, as economic conditions tightened.
Auto Loan Delinquencies Rise Slightly Year-Over-Year (Feb 2024 vs Feb 2025)
- Early-stage delinquencies (30–59 days past due) rose from 2.33% in Feb 2024 to 2.38% in Feb 2025.
- Mid-stage delinquencies (60–89 DPD) edged up from 0.90% to 0.92% year-over-year.
- Late-stage delinquencies (90–119 DPD) increased slightly from 0.31% to 0.33%.
States with the Highest and Lowest Car Loan Balances
- Texas leads the nation with the highest average car loan balance of $37,800, 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, 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, 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%, 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.
Technological Innovations in Car Loan Processing
- Online car loan applications surged by 38%, 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.
- 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 offering BNPL terms for specific vehicle purchases, appealing to younger borrowers.
Recent Developments
- Electric vehicle (EV) financing saw record growth, 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 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 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, reflecting the growing demand for sustainable vehicle options.
- The U.S. Treasury's new guidelines for auto loan tax deductions, introduced, 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. 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 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.
