Average monthly car payments have been increasing ever since the beginning of the chip shortage in 2020. Today, the average monthly car payment for a new car exceeds $700 for the first time ever, while the average monthly car payment for a used vehicle is more than $500.

Over the last 18+ months we’ve covered the tenuis rise of car prices. It’s shocking to think that the average car payment is now closing in on the average mortgage payment in America. Data from Edmunds shows that 12% of new car buyers in June are paying more than $1,000 a month. In 2021 the average home mortgage payment was roughly $1,000 a month. Let that sink in.

Here’s the latest data on new and used car payments, affordability, and which vehicles you should consider if you are looking for a relative “bargain” in today’s market.

Let’s dive in.

Average monthly payment on a new car

Data from J.D. Power/LMC Automotive suggests that the average new car transaction price was $45,844 in June. As compared to data from Cox Automotive, this average transaction price is actually down considerably when compared to prices from the end of 2021 and earlier in 2022.

For example, at the end of 2021 the average transaction for a new vehicle was $47,077 according to Cox Automotive, however the average monthly payment was only $688. This was a function of cheaper interest rates.

Today, the average monthly payment for a new car stands at $712 dollars. That is more than rent for a one bedroom apartment in some cities.

Average loan terms for a new car sit at 70 months, with most consumers opting for 6 year financing terms at an average interest rate of just over 5%. Back in December of 2021 the average new car interest rate was under 4%, accounting for the uptick in monthly payment amounts.

Average monthly payment on a used car

As you very well know, used car prices have skyrocketed ever since the beginning of the chip shortage. For the first time ever, the average used car monthly payment sits above $500. Data for Q1 of 2022 shows an average interest rate of 8.6% and an average loan term of 68 months. We expect data for Q2 to show a significant increase in the interest rate and monthly payment. We would not be surprised to see 9%+ as the average interest rate on a used car loan, and monthly payments in excess of $525 for the first time ever.

Used hybrids and electric vehicles are especially expensive in today’s market, with monthly payments on more fuel efficient vehicles in excess of $700.

What vehicles have the most affordable monthly payments?

Cox Automotive tells us that the average transaction price for a new car was $47,148 in May 2022. Where are the new car values?

Sadly, non luxury vehicles are seeing their prices increase rapidly as more consumers look for “value”. The average price paid for a new non-luxury vehicle in May was $43,338; on average a customer paid $1,000 over MSRP for a new non-luxury vehicle. We are seeing some below MSRP deals on Stellantis brands; Jeep, Ram, Alfa Romeo, Chrysler.

The average luxury car buyer paid $65,379 in May. They also spent about $1,000 over MSRP to get their new car.

The average electric vehicle buyer paid $64,000 in May. The Chevrolet Bolt represents the only real “bargain” in the EV space.

The average truck buyer paid $56,216 in May, while the average van buyer paid $48,671, and the average SUV buyer paid $46,073. The only “value” segment on the list are cars, where the average sedan buyer paid $41,902 in May.

Automakers such as Nissan have average transaction prices of $34,681. Compared to other automakers such as Toyota ($40,036) and Hyundai ($35,988) they represent a relative “steal”.

Ford, Stellantis, and GM have seen their average transaction prices increase significantly. Ford’s average transaction price stands at $49,528. Stellantis is at $53,212, and GM is at $50,854.