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Texas Leads the Nation in $1,000 or Higher Car Loans
Can’t Wait to Refinance?
If you’re planning to buy a car in 2024, you’ll find a wide selection at dealerships near you—something that wasn’t always the case a few years ago. However, while the supply of both new and used vehicles has returned to normal levels, the cost of owning a car remains high. This includes hidden costs like auto insurance, registration fees, and parking, depending on your location.
Moreover, the most noticeable cost, the auto payment, hasn’t decreased for many drivers still paying off old loans. These loans were often taken out when cars were scarce and interest rates were high. According to Experian data, more drivers are now paying over $1,000 per month to keep their car loans current in 2023.
Percentage of Auto Loans With Monthly Payments $1,000 or Greater
More than 4% of drivers are making four-digit monthly payments on their auto loans, a full percentage point higher than in 2023. As of June 2024, the average auto loan payment was $655, up from $619 in 2023.
| Year | Average Monthly Auto Loan Payment | Average APR, New 72-Month Vehicle Loan |
|---|---|---|
| 2022 | $579 | 4.79% |
| 2023 | $619 | 7.09% |
| 2024 | $655 | 6.86% |
Why Are Payments So High?
Why are more than 4% of drivers paying $1,000 or more in 2024, even though incentives are increasing and interest rates are falling? One reason is the timing of these loans. Many were originated earlier in the decade when drivers had less bargaining power. These drivers are still stuck with unfavorable terms.
Another reason is the sales prices of cars themselves. Although prices are finally decelerating, they are still high for both new and used cars, according to a survey by Cox Automotive.
Texas Leads the Nation in $1,000 or Higher Car Loans
It’s no surprise that states where drivers put the most miles on their vehicles are also where more drivers are paying high auto loan payments. Texas leads the nation, with 6.9% of drivers paying $1,000 or more monthly for each car loan. This is a full percentage point higher than the next seven states.
Average Monthly Auto Loan Payment by State
In contrast, New England and the Great Lakes states have only half the rate of borrowers with $1,000 or higher monthly auto payments. According to Experian data, average monthly loan payments in these states are closer to, if not lower than, the national average of $655.
Can’t Wait to Refinance?
With auto loan terms increasing—72- and even 84-month auto loans are becoming more common—it’s less surprising that higher loan payments persist, even as car prices and interest rates decline in 2024. Fortunately, borrowers with improved credit scores may benefit from auto loan refinancing, potentially lowering their APR.
For example, a driver with a $35,000 car loan balance and a $1,008 monthly payment at an 11% APR could refinance to a 7% APR if they have good credit. This could reduce their monthly payment to $970, saving $3,000 in interest over the loan term.
Contact O1ne Mortgage for Your Mortgage Needs
At O1ne Mortgage, we understand the financial challenges of car ownership. If you’re looking to refinance your auto loan or need any mortgage services, call us at 213-732-3074. Our team is here to help you find the best financial solutions tailored to your needs.
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