Young African American couple getting car keys from car dealer at desk in dealership.

How Much Is The Average Car Payment Per Month? What To Expect In 2022

Hanna Kielar5-minute read
UPDATED: December 12, 2022


Since the earliest days of the COVID-19 pandemic, the global economy has experienced supply chain shortages that have made it difficult to get products to consumers and led to the highest inflation rate in 40 years. The car market has been one of the hardest-hit industries, suffering from a global shortage of semiconductor chips just as government stimulus checks started fueling strong consumer demand.

Let’s take a look at where all this leaves new and used car buyers who are trying to figure out how to budget for monthly car payments in 2022.

What Is The Average Car Payment Per Month?

It’s been a wild ride for car sales since the pandemic started in 2020. Car manufacturing relies heavily on supply chains that were disrupted around the world.

New Cars

According to data based on Q4 of 2021, monthly car payments on new cars increased to $644. Average monthly payment prices per month had been on the rise prior to the pandemic, but that was widely attributed to consumer preferences for luxury vehicles. From February 2021 to February 2022, new car prices rose 12.4% according to ExperianTM.

Now, the rise is being fueled by continuing high demand from consumers and frustratingly low supply from manufacturers. The culprit? Not enough of the computer chips car makers need to run their car’s systems.

Used Cars

Because they have all their computer chips already, used cars have become a very hot commodity.

The average monthly car payment for a used car purchase jumped to $488 in Q4 of 2021. Used car prices soared an incredible 41.2% from February 2021 to February 2022. This may sound like bleak news, but there’s a way to use this to your advantage.

Skip The Negotiations

Our specialists will work directly with the dealer to get you the best price.

Are Car Prices Still High In 2022?

Yes. And, unfortunately, the worsening supply of semiconductor chips, geopolitical tensions and far-reaching sanctions will likely combine to keep supplies low for a while. On the demand side, plenty of frustrated consumers are anxious to buy a new car.

Additionally, interest rate increases will make all consumer credit more expensive. So if you’re planning on taking out a loan to pay for your new vehicle any time soon, it may cost you more than it did in 2020 and 2021.

What’s In A Monthly Car Payment?

Your monthly car payment comprises the principal balance and interest, plus – depending on your lender – various fees.

That’s why lenders are required to disclose the annual percentage rate (APR) of their loan offers. APR takes all the costs of the loan and the interest rate into account to calculate a rate reflecting the true cost of the loan.

Remember that your monthly car payment doesn’t include car insurance, maintenance or fuel, so be sure to factor these into your budget plan.

Look for each loan’s APR to compare the costs of the loans on an apples-to-apples basis.

How Can I Reduce My Monthly Car Payment?

You’ll likely have little room to negotiate your car’s purchase price with supply so low and demand so high, but you can take other steps to minimize your monthly car payments. 

Raise Your Credit Score

If your credit is less than excellent and you can postpone the purchase of a new or used car, you’ll save money by taking some time to improve your credit score. Start by getting a copy of your credit history and checking for mistakes. Pay down some of your existing debt to lower your debt-to-income ratio, and make sure you make all your payments on time. After a few months, you’ll start seeing improvements in your score.

If your credit score is low and you can’t delay purchasing a car, you can use various strategies to get a car loan.

Make A Bigger Down Payment

Making a bigger down payment is a great way to reduce your monthly car payments without incurring additional costs. The benefits are twofold: Borrowing less money means having less money to pay back, and putting more of your own money into the purchase will reassure lenders that you have as much skin in the game as they do.

Lengthen Your Loan Term

You can choose to repay your loan quickly – the shortest auto loan is generally 24 months, or 2 years, and the longest has creeped up to 84 months, or 7 years. However, the longer it takes to repay your loan, the more it’ll cost you overall (thanks, interest). You also run the risk of being underwater on your loan as time goes on – in other words, you’ll owe more on the loan than the car is worth.

Bear in mind that cars, on average, can last for 200,000 miles, or 12 years, but many drivers prefer to trade their cars in earlier to maximize trade-in value and avoid costly repairs and unreliability.

Negotiate Over Trade-In Value

There’s currently not much reason for dealerships to knock a few thousand dollars off a car’s sticker price, but it’s worth noting that in this market, used cars are in some cases as or more expensive than new cars. You may find that sales staff have a little more wiggle room when evaluating your present car’s worth, known as its trade-in value, which you can easily find online.

Trading in a car may seem more daunting than it actually is. The dealer may give the car a once-over to see if there’s any significant body damage, but the dealer won’t take a magnifying glass to your current car.

While technically not a reduction in sticker price, getting more money for your current vehicle will reduce the amount of money you’ll need to borrow because you can role your trade in amount to a down payment on a different vehicle. And ultimately your monthly payment will shrink as well.

Can I Save Money By Leasing A Car?

Generally, the answer is yes leasing reduces your monthly payment compared to buying a new car. The idea behind leasing is that you’ll only be paying for the time you’re using the car, although you’re never building equity in the car.

In 2022, the short supply of vehicles is making leasing more difficult and expensive than it customarily would be.

When Will The Car Market Return To ‘Normal’?

It’s really hard to say because the answer depends on when manufacturers can secure an adequate supply of semiconductor chips. Expect conditions to level out closer to 2024, based on most financial experts’ forecasts.

The Bottom Line: If Buying A Car In 2022, Make Extra Room In Your Budget

Car prices are historically high and expected to remain this way throughout 2022. Average monthly car payments will likely reach a new high this year, so consider this when budgeting for any new or used car.

A car you can count on to get you places is usually a necessity, and if you need reliable transportation, Rocket AutoSM is here to help. Check out our list of the best cars and SUVs for the money to narrow your search for an affordable vehicle.

Skip The Negotiations

Our specialists will work directly with the dealer to get you the best price.

Hanna Kielar

Hanna Kielar is a Section Editor for Rocket Auto℠, RocketHQ℠, and Rocket Loans® with a focus on personal finance, automotive, and personal loans. She has a B.A. in Professional Writing from Michigan State University.