Best Tips to Reduce Your Average Car Payment for Used Cars

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Average Car Payment for Used Cars

If you’re planning to buy a used car in 2023, you need to know how much you can expect to pay for it every month. Your average car payment for used cars depends on several factors. These include credit score, loan amount, interest rate, and loan term. 

Finding this information is essential for you to budget effectively and make informed financial decisions. 

We’ll cover how these factors affect your monthly car payment and give you some tips on how to budget for it effectively.

Average Car Payment for Used Cars
– Table of Contents –

Understanding Car Payments: The Basics

a piece of paper with coins surrounding it that has the words "car payment?"

Before diving into the specifics of average car payments for used cars, let’s establish a basic understanding of car payments. 

What Is an Average Car Payment?

An average car payment is the monthly amount you pay to finance a car over a certain period of time. 

This payment typically includes both the principal and the interest. 

The principal means the actual cost of the car. Interest means the amount charged as a fee by the lender who let you borrow the money. 

Factors Affecting Car Payments

Several factors influence car payments. These include:

  • Your credit score. This is a number that will influence the terms and interest of your loan.
  • The loan amount. The higher the loan amount means a higher monthly payment. 
  • Your interest rate. This is the percentage of the loan amount that you pay as a fee to borrow money. 
  • The loan term. This is the number of months or years you have to repay the loan. 
  • The used car. The type and condition of a used car can affect the average car payment for used cars.

Understanding these factors will help you estimate your monthly car payment more accurately.

Estimating Your Monthly Car Payment

To estimate your monthly car payment, you need to consider various factors that impact the overall cost of financing a used car.

Determining Your Budget

The first step in estimating your monthly car payment is to determine how much you can afford to spend on a car. 

To do this, you need to assess your monthly income, expenses, and financial goals. This will let you set a realistic budget for your car payment.

We recommend that you try to keep your monthly car payment below 25-30% of your monthly income. 

Your Credit Score

The next step is checking your credit score. Since it will affect your loan term and interest rate, it’s important to know where you sit.

Your credit score is based on your credit report. This report contains information about your credit history, such as your payment history, credit utilization, credit mix, and credit inquiries.  

You can get a free copy of your credit report one every 12 months at

The Impact of your Credit Score

According to Experian, the average credit score for used car buyers in 2022 was 677, which falls into the fair category. 

The table below shows how different credit score ranges can affect your interest rate and monthly payment for a used car loan.

Credit Score Range Average Interest Rate Average Monthly Payment 

Super Prime (781-850) 4.21% $370 

Prime (661-780) 6.05% $445 

Nonprime (601-660) 11.41% $527 

Subprime (501-600) 17.74% $588 

Deep Subprime (300-500) 20.45% $647

Take the Time to Improve Your Credit Score

As you can see, having a better credit score can save you lots of money. This applies to your car payments as well as any other type of loan.

We suggest you read our guide on how to improve your credit score and follow it methodically. 

Comparing Loan Amount and Interest Rates

The final step in estimating your monthly car payment is to compare different loan amounts and interest rates. 

You can use online car loan calculators to see how changing these numbers affects your payment and total cost of your loan. 

For example, let’s say you want to buy a used car that costs $25,000 and you have a fair credit score of 650. You have $5,000 for a down payment and you want to get a 60-month loan. 

Interest Rate Monthly Payment Total Cost 

6% $387 $23,220 

8% $405 $24,300 

10% $424 $25,440 

12% $444 $26,640

Clearly, a higher interest rate means a higher monthly payment. It also means a higher total cost of your loan.

It’s very important to shop around for different lenders or financing sources. You want to compare offers from banks, credit unions, online lenders, dealerships, or buy here pay here dealerships. 

Average Car Payments for Used Cars in 2023

a sleezy looking used car salesman with a cigar and dollar bills in his mouth showing the average car payment for used cars

To understand what to expect in terms of average car payments for used cars in 2023, it’s essential to consider market trends, financing options, and calculations.

Market Trends and Price Ranges

Market trends, such as supply and demand, can affect the average price range for used cars. 

According to, the average price for used cars in 2022 was $27,689, which was up 31% from 2021. This was due to factors such as the global chip shortage.

The chip shortage was induced by the pandemic which caused a slowdown in new car production. This increased the demand for used cars. 

You can read our article that goes more in-depth covering the chip shortage. 

The average price range for used cars in 2023 is expected to remain high or even increase further. The supply issues persist and the demand remains strong. However, the price range may vary depending on the type, condition, age, mileage, features, and location of the car. 

Therefore, it’s important to research the current market conditions to get an idea of the average price range for used cars in 2023. 

Calculating Average Monthly Payments

Calculating average monthly payments involves considering a few factors. These include the loan amount, interest rate, and loan term. 

Online car loan calculators can help estimate your monthly payment based on these factors.

What is the Average Monthly Car Payment for Used Cars in 2023?

The average car payment for used cars in 2023 is expected to be around $556 per month. 

This is up from $493 per month in 2022. 

If you have bad credit or no credit, this is expected to be even higher.

Credit Score and Average Car Payments for Used Cars

Your credit score is one of the most important factors that will affect your car payment. 

Your credit score reflects your credit history and how well you manage your debt. 

A higher credit score will help qualify you for a lower interest rate. This will save you money on your monthly payment and the total cost of the used car. 

Loan amount and Average Car Payments for Used Cars

The amount of money you borrow will also affect your monthly payment. 

The loan amount depends on the price of the car you buy, minus any down payment or trade-in value. A larger loan amount will result in a higher monthly car payment. 

Term length and Average Car Payments for Used Cars

The loan term is the number of months you have to repay the loan. It affects both your monthly payment and the total interest you pay over the life of the loan. 

A shorter loan term will result in higher average car payments for used cars. That may not seem like a good thing,  but it means you’ll pay it off sooner and pay less interest. 

A longer term will result in lower monthly payments. You will pay more interest over the life of the loan and also pay for much longer. 

Interest rate and Average Car Payments for Used Cars

The interest rate is the amount of money you pay to borrow money. It is reflected by a percentage based on the overall amount.

The interest rate is determined by several factors. These include credit score, the type of car, the lender, and the market conditions. 

A higher interest rate will result in higher average car payments for used cars.

Car price and Average Car Payments for Used Cars

The price of the car you buy will also affect your monthly payment. 

The car price depends on many factors. These include the make, model, year, condition, mileage, features, and demand of the car. 

A more expensive car will result in a higher monthly payment.

Aftermarket Products

Many aftermarket products like extended service contracts or GAP are purchased with your vehicle. Most of the time these products are rolled into the loan.

They offer protection or coverage on your car but can also increase the cost of the loan. 

This may not seem like a big deal since it’s only a few dollars that increase. Yet, it will increase the overall amount you pay for your monthly car payment. It’ll also raise the amount you pay for the entire car. 

Car insurance

While not directly part of your monthly car payment, car insurance is another cost that you will need to factor in. 

Car insurance covers you and your car in case of an accident or theft. 

The cost of car insurance will vary depending on a few things. These include your age, driving history, the area you live, and the type of car you buy.

Tips for Managing Car Payments

dollar bills with a paper with the word "budget" on it showing tips to manage the average car payment for used cars

Managing car payments responsibly is crucial to maintain financial stability. Here are some tips to help you manage your car payments effectively.

Negotiating the Best Deal

When buying a used car, it’s essential to negotiate the best deal possible. 

Research the market value of the car and compare prices from different sellers. Be prepared to negotiate the price and financing terms too. This will allow you to secure a more favorable car payment.

Ultimately, consider the value that is being provided to you. For example, if one dealer offers you a car with no warranty for $500 less and the other with a warranty, which would you prefer?

Considering Loan Terms and Duration

The length of your loan term should match your financial situation and goals.

If you can afford higher monthly payments, choose a shorter loan term. It will save you interest and get rid of payments faster. 

If you need lower monthly car payments, choose a longer loan term. Just be aware that it will result in more interest paid over time. 

Budgeting for Additional Costs

Remember to include other costs related to owning a car in your budget. Things such as insurance, maintenance, repairs, fuel, taxes, fees, and depreciation. 

These costs can vary depending on the type of condition of your used car. They can also vary depending on the amount of driving you do.

Including these in your overall budget will help you manage your car payments more effectively.

Tips for Reducing Your Average Monthly Car Payment

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There are a number of things you can do to reduce your monthly car payment. Some tips include:

  • Improve your credit score. By improving your credit score before applying for a car loan, you can qualify for lower interest rates. This will help reduce your average car payment on a used car.
  • Get a longer loan term, although we highly recommend you don’t. You can shop around to different lenders that offer longer loan terms. 
  • Negotiate a lower interest rate. Same as above, shop around and find different lenders. They see which will give you the lowest rate.
  • Shop around for car insurance. This won’t reduce your car payment but can reduce your car-related expenses. By doing this, you can have more money available to dedicate to your car.
  • Buy a less expensive car. Choose a model with fewer features, slightly higher miles, or one that has sat for longer. 
  • Consider an older used car. An older used car typically means less expensive as well. There is usually more room to negotiate here.
  • Make a larger down payment. By reducing the overall balance initially, it decreases your average car payment for used cars.

Don’t Settle for The Average Car Payment for Used Cars

Understanding the average car payment for used cars in 2023 is crucial when buying a vehicle. 

By considering factors such as your budget, credit score, loan amount, interest rates, and market trends, you can estimate your monthly car payment more accurately. 

It’s important to manage your car payments responsibly and explore different ways to reduce your monthly payment. This will help you find the best terms for your financial situation and save you tons of money. 

Average Car Payment for Used Cars
– FAQs –

a piece of paper with the word "car?" showing the average car payment for used cars faq

Q1. How can I improve my credit score to qualify for better car loan terms?

Improving your credit score involves paying bills on time, reducing debt, and maintaining a low credit utilization ratio. Regularly monitoring your credit report and addressing any errors or discrepancies can also help improve your credit score over time.

Q2. Can I refinance my car loan to lower my monthly payments?

Yes, refinancing your car loan is an option to lower your monthly payments. If interest rates have decreased since you initially financed your car, refinancing can help you secure a lower interest rate, resulting in a reduced monthly payment.

Q3. Are there any penalties for paying off a car loan early?

Some lenders may impose prepayment penalties for paying off a car loan early. It’s important to review the terms of your loan agreement and discuss any potential penalties with your lender before making early payments.

Q4. How do I budget for additional car-related expenses, such as insurance and maintenance?

When budgeting for car-related expenses, consider obtaining insurance quotes, researching average maintenance costs for the make and model of the car, and setting aside a portion of your monthly budget for these expenses. Planning ahead will help you avoid financial surprises.

Q5. Can I estimate my car payment without knowing the exact interest rate?

While knowing the exact interest rate is helpful for precise calculations, you can estimate your car payment using an average interest rate based on your credit score range. This estimation will provide a general idea of your potential monthly payment until you receive specific loan offers.

Q6. What is the average car payment for a used car with bad credit in 2023?

The average car payment for a used car with bad credit in 2023 is expected to be around $647 per month.

Shameless Plug –
Contact Us Today to Get Approved For Your Pre Owned Vehicle

If you’re in the market for a used car, truck, SUV, or van, and you’re worried about your credit score, we are here to help

Our team will help you get the pre-owned vehicle you need. With timely payments, it can improve your credit as well.

Thousands of other happy customers of the Fresno area just like you have already been approved and are on their path to a better future. With low down payments starting at only $500, great premiums for your trade-in, and a free warranty, you’ll be set up to succeed from the start.

Contact us today! Learn all about our selection of pre-owned vehicles and bad credit car financing options.

Extra Resources To Help On Your Journey

We love to share the wealth! Here are some resources and trusted vendors that we personally use. They can help you take care of your vehicle as well as keep your credit and finances in tip-top shape:

Car Parts

High Quality and Affordable Car Parts: Advance Auto Parts

High Quality Dash Cams and Car Accessories: Rexing USA or VanTrue or Nextbase

Car Audio & Sound Systems: Eonon 

Premium Wiper Blades & Accessories: Clix Auto

Easy Key Replacement & Programming DIY: Car Keys Express

High-Quality Orignal and Custom Car Lighting: LASFIT

Quality Car Parts/Accessories (mats, covers, assemblies): Oedro

Premium Car Detailing Supplies: Chemical Guys

High-Performance Car Parts & Air Filters: KN Filters 

High-Performance Parts: Max Speeding Rods

Speed and Performance Parts: Spectre Performance

Air Intakes: Airaid

Original & Aftermarket Wheels: OE Wheels LLC

Battery Tenders: Deltran Battery

High-Quality Tires Of All Types: Priority Tire or Discount Tire

DIY Car Extras

In the event your dealer doesn’t provide you a history report: VinAudit

To learn to recondition your old car battery: EZ Battery Reconditioning

For DIY Ford vehicle repair: Ford Shop

To learn to take some knicks out of your car’s paint: High Quality Car Spray

If you find yourself in need of a car rental: Discover Cars or Airport Rental Cars or Holiday Autos

If you’d like to see what public car auctions are like: Gov Auctions or Gov Seized Auction

Personal Finance & Credit

To help you improve your credit: Axion Credit Repair or Coast Tradelines

For a DIY credit repair course: DIY Credit Repair

To help you get free of debt and increase your credit: What Lies In Your Debt?

If you’re in a bind and need cash quickly: Bad Credit Loans or Cash Advance

For personal loans of higher quantities: Fortuna Credit or Personal Loans

For a high cash-back credit card (make sure you only use it as if it’s a debit card!): Laurelroad 

We will keep sharing all our vendors that we have a great experience with. Only the ones we see align with our values as time goes on, both locally and nationwide.

Disclaimer: The information provided in this article is for educational purposes only. It is not financial advice. Always consult with a qualified financial professional for personalized guidance.