Key takeaways
- Texas has the highest car loan balance of $7,810.
- While vehicle expenses vary across the country, drivers can still work to secure a competitive rate by improving their credit and comparing different lenders,
- Vehicle affordability is still a challenge for many drivers and has resulted in more auto loan delinquencies.
Geographical location isn’t a big factor influencing average car loan delinquency rates, interest rates and payments. Rather, they are determined by a driver’s credit score and history, income, debts and the loan amount and term. But when you break those stats down by location, you get a peek at the economic conditions in each state.
Over the past year, drivers have had to borrow more for their vehicles. These higher auto loan balances, combined with steep interest rates, have made vehicle ownership a challenge for many. As interest rates and loan balances increase, find out how your home state is doing.
Car payment statistics
- The average monthly payment for new cars is $734, according to second quarter data from Experian.
- The average monthly payment for used cars is $525, according to Experian.
- New cars cost an average of $48,401, according to Kelley Blue Book.
- The average loan term for new cars is 68.48 months, according to Experian.
- The average loan rate for new cars is 6.84 percent, according to Experian.
- The average loan term for used cars is 67.41 months, according to Experian.
- The average loan rate for used cars is 12.01 percent, according to Experian.
- Drivers pay an average down payment of $4,140 for used vehicles, according to Edmunds.
States with the highest car loan balance
An auto loan balance is the remaining amount a driver has to pay on their loan. The amount that drivers are spending on their vehicles has been on an upward trend since 2020, according to the Federal Reserve, at $1.63 trillion nationally.
The average car loan balance across the country is $5,640, according to the Federal Reserve. Below are the 10 states with the highest car loan balance in the country.
| State | Average car loan balance |
|---|---|
| Texas | $7,810 |
| Louisiana | $6,860 |
| Florida | $6,560 |
| New Mexico | $6,550 |
| Georgia | $6,510 |
| Mississippi | $6,280 |
| Nevada | $6,190 |
| North Dakota | $6,180 |
| New Hampshire | $6,160 |
| Arkansas | $6,150 |
While vehicle costs have been leveling out, they are still not at pre-pandemic levels, explains Satyan Merchant, senior vice president and automotive and mortgage business leader at TransUnion.
“Affordability continues to pose a challenge for the used vehicle market and, in particular, for below prime consumers, who have seen a buying climate of higher interest rates, increasing lender pullback, and cross-wallet inflation. While some brands continue to see lingering shortages, new vehicle inventories continue to recover from their pandemic-era lows.”
Looking ahead
New vehicle prices finally hit a plateau at the end of 2023, and used vehicle prices are down almost 5 percent, according to Edmunds. Ideally, those purchasing in the coming year will be able to find better car prices and, in turn, sign off on better loans.
In addition, drivers have been choosing longer loan terms to lower the monthly cost of their car payments. Average used vehicle terms in the first quarter of 2024 reached 67.37 months. New vehicle terms told a similar story, with drivers financing for an average of 67.62 months.
Average car payment by state
| State | Average used car APR | Average monthly payment |
|---|---|---|
| Hawaii | 13.12% | $684.26 |
| Mississippi | 13.58% | $729.44 |
| Louisiana | 12.98% | $755.85 |
| Georgia | 13.26% | $763.71 |
| New Mexico | 12.23% | $727.35 |
| Nevada | 12.91% | $732.81 |
| West Virginia | 12.39% | $700.62 |
| Alaska | 11.71% | $825.53 |
| Texas | 12.44% | $728.50 |
| South Carolina | 12.21% | $723.39 |
Sources: iSeeCars and Edmunds
The average monthly payment figures for each state were calculated using a combination of the average used car price and interest rate for each state, along with the national average loan term. However, we didn’t factor in a down payment, which would reduce the monthly payment.
Loan terms typically last between 24 and 84 months. A few lenders even offer 96-month terms. A longer term lowers the monthly cost, but it leads to a higher cost overall.
The interest rate you pay for your vehicle depends on various factors, such as your credit, the vehicle type, and the terms you choose. According to second quarter data from Experian, drivers can expect to pay around 6.84 percent for new cars and 12.01 percent for used cars.
The average APRs as of June 12, 2024, based on a Bankrate study, are as follows:
| 36-month term | 48-month term | 60-month term | |
|---|---|---|---|
| New car | 7.77% | 7.81% | 7.91% |
| Used car | 8.47% | 8.55% | 8.98% |
Average used car price by state
| State | Average used car price |
|---|---|
| Wyoming | $42,070 |
| Montana | $39,804 |
| Alaska | $38,586 |
| North Dakota | $37,461 |
| Idaho | $36,389 |
| South Dakota | $36,352 |
| Texas | $34,355 |
| Colorado | $34,081 |
| Utah | $33,774 |
| Iowa | $33,695 |
SUVs remain the most popular vehicle type, totaling about 58 percent of financed vehicles in the second quarter of 2024, according to Experian.
Car loan delinquency by state
| State | Average delinquency rates |
|---|---|
| Mississippi | 6.77% |
| Alabama | 6.05% |
| Georgia | 5.71% |
| Louisiana | 5.69% |
| Indiana | 5.29% |
| Hawaii | 5.24% |
| Michigan | 5.24% |
| Delaware | 5.20% |
| South Carolina | 5.20% |
| North Carolina | 5.14% |
Source: New York Fed Consumer Credit Panel
Texas has the highest average car loan balance but the 15th highest average delinquency at 4.72 percent. Mississippi leads with 6.77, notably higher than the other national averages.
When it comes to prioritizing your payment, the key is preparedness. To do this, you must only finance what you can afford. The best way to do this is to calculate your monthly payment and your loan’s lifetime interest, then compare it with your budget.
States with the lowest car loan balance
| State | Average auto loan balance |
|---|---|
| Hawaii | $4,210 |
| Massachusetts | $4,280 |
| Connecticut | $4,300 |
| New York | $4,430 |
| Oregon | $4,470 |
Source: New York Fed Consumer Credit Panel
Hawaii takes the gold medal for lowest average auto loan balance, followed closely by the home of the Mayflower, Massachusetts. These states carry averages dramatically lower than the national average of $5,640. But as explained, the auto loan balance is independent of ZIP code and rather relates to the economic circumstances of residents.
Financial literacy, income and cost of living all play important roles. When looking at the states with the lowest balances, for example, three out of the five hold some of the highest median household incomes in the country, according to the Census Bureau. Average credit scores also tend to be higher in these states.
Hawaii’s average FICO score is 732, falling under the good category, according to Experian. That’s higher than the national average credit score of 714. The remaining states carry similarly high averages.
The bottom line
No matter what state you call home, you can still secure a competitive auto loan rate by working to improve your credit score and shopping around with several lenders. While there are factors outside your control, such as vehicle price tags and current rates, the better your credit score is, the better your rates will likely be.
If you are struggling to find a monthly payment that you can afford, consider shopping for bad credit auto loans, which cater to those with little or no credit.
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