The Average Cost of Auto Payments in 2024: US vs. Canada

If you’ve ever purchased a new car , you probably needed a loan. About 80% of new cars are financed with either a loan or lease in the United States, according to 2023 data from the Federal Reserve. Financing is less prevalent with used cars , but it still applies to more than one-third (38%) of used-car purchases. This means a lot of Americans make monthly car payments — and those payments are similar to the ones you will find across the border in Canada.

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Average auto payments vary depending on many different factors, including the type of car, its price, the size of your down payment, the loan terms, your location and your credit history .

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The Cost of Auto Payments in the United States as Compared to Canada

For most Americans, the monthly car payment is a major budget item . The average car payment for new vehicles in the U.S. was $735 a month in the first quarter of 2024, according to a recent report from LendingTree , which analyzed Experian data. The average payment on a used car was $523 a month. Both figures were up slightly from the previous year.

Car payments in Canada are pretty close to the U.S. average. Canadians typically spend between $500 and $1,000 a month on their auto payments, according to Finder.com . A lot depends on whether the car is new or used. For example, the average payment on a new car is $1,055.15 a month with a loan amount of about $60,000, a term of 72 months and an average interest rate of 8.24%. The average payment on a used car is $598.28 a month with a loan amount of about $34,000 and the same loan terms.

The Globe and Mail estimated the average new-vehicle loan payment in Canada at about $880 a month. However, nearly 30% of buyers who finance their purchases are paying at least $1,000 a month.

Meanwhile, one trend to keep an eye on in the U.S. is how many Americans are delinquent on loans. As LendingTree noted, 4.4% of outstanding auto debt was at least 90 days late in the first quarter of 2024. That was up 13.4% from the previous year. The percentage of auto loans that fell to 30 days past due was 7.9% in the 2024 first quarter, up 15.4% from 6.9% in the first quarter of last year.

How To Keep Your Monthly Payment Under Control

You can shrink your monthly payment in numerous ways. The most obvious one is to buy a less expensive car, but you can also get a lower payment by stretching the loan out over more years. This isn’t advisable, though, because you’ll end up paying a lot more in interest over the life of the loan.

Robert Frick, corporate economist at Navy Federal Credit Union , advised against taking out a car loan with a term that’s longer than five years . You’re nearly always better off choosing a cheaper car that can be paid off in less than five years. Doing so will not only lower your overall loan cost — it will also help ensure that you’re not still financing the car long after it passes its prime.

“People have to think differently about buying a car, or they’re going to be trapped in what a lot of people find themselves in right now, which is [having to deal with] grossly expensive repairs [and] higher insurance,” Frick told GOBankingRates in a recent interview. “When you get your next car, get a cheaper, more dependable car, and all of a sudden your costs will be dramatically less.”

This article originally appeared on GOBankingRates.com : The Average Cost of Auto Payments in 2024: US vs. Canada