In this article:
Average auto loan balances increased 7.7% to $22,612 in 2022, according to Experian data. The increases were broadly based, impacting all U.S. regions and types of consumers who sought vehicle financing in 2022.
As part of our continuing coverage of consumer credit and debt, we looked at anonymized Experian credit data to observe recent trends in auto financing and analyze how those trends may continue to affect car buyers in 2023.
Elevated costs due to inflation were hard to ignore in 2022, having affected almost everything consumers bought, but price hikes weren't new for anyone who has shopped for a car or truck in recent years. The jump in auto prices that started in 2020 was initially assumed by many to be the result of supply chain shortages that would only impact prices until manufacturers could catch up. Instead, it now appears the auto prices were simply leading the parade of now-costlier items, from housing to the grocery aisle.
Auto inventories caught up somewhat in 2022, but car prices remained stubbornly high. Elevated vehicle costs meant more consumers had to dig deeper to cover the cost of financing either a new or used car. Although credit continued to be extended to car buyers, they were paying more in interest in September 2022 versus September 2021. The average APR for new-car financing reached 5.16% in the third quarter (Q3) of 2022, up from 4.09% in 2021, according to Experian's State of the Automotive Finance Market report from Q3 2022. Average monthly payments have increased from $618 to $700.
Total Auto Debt Climbs to $1.41 Trillion
Drivers owed $1.41 trillion on cars, motorcycles and other personal vehicles as of Q3 2022, according to Experian data, an increase of $72 billion over 2021.
| Snapshot: Total Auto Loan Debt | ||||
|---|---|---|---|---|
| 2019 | 2020 | 2021 | 2022 | 2021-2022 Change |
| $1.21 T | $1.25 T | $1.33 T | $1.41 T | +$72 B |
Source: Experian data from Q3 of each year
The increase was similar to that of the year prior, when auto debt grew by $79 billion. In this regard, the increase in auto loan balances was more modest than for other types of consumer debt including mortgages, credit cards and personal loans, which grew at faster rates in 2022 than was seen in 2021.
Average Auto Loan Balance Grows 7.7%
Average outstanding auto loan debt balances increased by 7.7% to $22,612 from Q3 2021 to Q3 2022. This increase was even sharper than the 6.5% increase from 2020 to 2021.
| Snapshot: Average Auto Loan Balance | |||||
|---|---|---|---|---|---|
| 2019 | 2020 | 2021 | 2022 | 2021-2022 Change | |
| Average auto loan balance | $19,408 | $19,703 | $20,987 | $22,612 | +$1,625 |
Source: Experian data from Q3 of each year
Higher balances are the result of both inflation, which topped out at 9.1% for all sectors in June 2022 before falling, and continuing shortages in both the used and new car markets.
The average new vehicle loan amount increased from $37,746 in Q3 2021 to $41,665 in Q3 2022, according to the Experian Automotive report. Used car prices slowed somewhat, but still cost an average of $28,506 in Q3 2022, up from $26,251 in 2021.
Rate of Auto Delinquencies Rise in 2022
Auto delinquency rates increased in 2022 from very low levels set 12 months prior, with consumers 30-59 days late on their auto payments increasing to 2.19% as of September 2022, a 0.53 percentage point increase from 2021.
| Auto Loan Delinquency Rates | |||
|---|---|---|---|
| Delinquency Period | 2021 | 2022 | Change |
| % of accounts 30-59 days past due | 1.66% | 2.19% | +0.53 percentage points |
| % of accounts 60-89 days past due | 0.55% | 0.81% | +0.26 percentage points |
| % of accounts 90-180 days past due | 0.18% | 0.30% | +0.12 percentage points |
Source: Experian data from Q3 of each year
Despite the increases, the percentage of consumers delinquent on their loan was still lower in September 2022 than their respective 2019 rates.
Auto Balances Rise Across All Credit Score Ranges
Average balances increased for all auto loan borrowers in 2022, with growth ranging from 5.8% among those with exceptional FICO® Scores☉ (800 or higher) to as much as 12.3% for drivers with poor credit.
| Average Auto Loan Balance by FICO® Score Range | ||||
|---|---|---|---|---|
| 2020 | 2021 | 2022 | 2021-2022 Change | |
| 300-579 Poor | $16,418 | $17,323 | $19,459 | +12.3% |
| 580-669 Fair | $20,180 | $21,472 | $23,475 | +9.3% |
| 670-739 Good | $21,525 | $22,935 | $24,750 | +7.9% |
| 740-799 Very good | $20,259 | $21,569 | $23,106 | +7.1% |
| 800-850 Exceptional | $18,357 | $19,355 | $20,472 | +5.8% |
Source: Experian data from Q3 of each year
Consumers with FICO® Scores in the good range—which represents roughly a quarter of all consumers—owe an average of $24,750 on their auto loans. Those with lower scores, who in normal economic conditions are more likely to finance used vehicles, tend to have slightly lower balances.
But financing rates were up on all vehicles regardless of credit score, or financing used or new. Those with FICO® Scores below 670 are seeing the sharpest increases in average balances, likely a reflection of both a tighter used car market and an increase in interest rates for these borrowers. Rates for borrowers with lower credit scores often exceed 10% APR, according to Experian's State of the Automotive Finance Market report.
Increases in Auto Balances Largest in California and New Jersey
For the third year in a row, auto loan balances increased in every state. Most states recorded an annual increase in auto balances from 5% to 10% in 2022. The outliers below 5% growth were Arkansas, Montana, West Virginia and Wyoming. At the other end of the spectrum, California and New Jersey saw double-digit increases in auto loan balances.
| Average Auto Loan Balance by State | |||
|---|---|---|---|
| 2021 | 2022 | Change | |
| Alabama | $22,769 | $24,127 | +6% |
| Alaska | $24,325 | $25,846 | +6.3% |
| Arizona | $23,245 | $24,946 | +7.3% |
| Arkansas | $24,311 | $25,418 | +4.6% |
| California | $21,027 | $23,268 | +10.7% |
| Colorado | $21,593 | $23,228 | +7.6% |
| Connecticut | $17,115 | $18,491 | +8% |
| Delaware | $20,374 | $21,585 | +5.9% |
| District of Columbia | $18,442 | $20,003 | +8.5% |
| Florida | $21,341 | $23,412 | +9.7% |
| Georgia | $22,958 | $24,673 | +7.5% |
| Hawaii | $21,024 | $22,350 | +6.3% |
| Idaho | $22,353 | $24,339 | +8.9% |
| Illinois | $20,099 | $21,433 | +6.6% |
| Indiana | $19,769 | $21,078 | +6.6% |
| Iowa | $20,882 | $22,029 | +5.5% |
| Kansas | $21,306 | $22,551 | +5.8% |
| Kentucky | $20,554 | $21,909 | +6.6% |
| Louisiana | $24,826 | $26,438 | +6.5% |
| Maine | $18,824 | $20,252 | +7.6% |
| Maryland | $21,228 | $22,809 | +7.4% |
| Massachusetts | $16,864 | $18,205 | +8% |
| Michigan | $16,560 | $18,038 | +8.9% |
| Minnesota | $19,021 | $20,098 | +5.7% |
| Mississippi | $23,121 | $24,530 | +6.1% |
| Missouri | $20,473 | $21,588 | +5.4% |
| Montana | $22,272 | $23,309 | +4.7% |
| Nebraska | $20,102 | $21,367 | +6.3% |
| Nevada | $22,876 | $24,816 | +8.5% |
| New Hampshire | $18,610 | $19,774 | +6.3% |
| New Jersey | $17,309 | $19,228 | +11.1% |
| New Mexico | $24,837 | $26,622 | +7.2% |
| New York | $17,498 | $19,090 | +9.1% |
| North Carolina | $21,170 | $22,642 | +7% |
| North Dakota | $22,622 | $23,758 | +5% |
| Ohio | $18,411 | $19,658 | +6.8% |
| Oklahoma | $24,317 | $25,657 | +5.5% |
| Oregon | $20,171 | $21,684 | +7.5% |
| Pennsylvania | $18,641 | $19,913 | +6.8% |
| Rhode Island | $16,465 | $17,798 | +8.1% |
| South Carolina | $21,005 | $22,392 | +6.6% |
| South Dakota | $20,939 | $22,113 | +5.6% |
| Tennessee | $22,307 | $23,878 | +7% |
| Texas | $25,925 | $27,739 | +7% |
| Utah | $21,560 | $23,270 | +7.9% |
| Vermont | $18,708 | $19,839 | +6% |
| Virginia | $21,035 | $22,355 | +6.3% |
| Washington | $21,922 | $23,754 | +8.4% |
| West Virginia | $23,465 | $24,382 | +3.9% |
| Wisconsin | $18,670 | $19,826 | +6.2% |
| Wyoming | $26,511 | $27,166 | +2.5% |
Source: Experian data from Q3 of each year
Average auto loan balances are generally only under $20,000 in some Northeast and Midwestern states. Just as common are states where average auto loan balances now exceed $25,000, as is the case with Alaska, Arkansas, Louisiana, New Mexico, Oklahoma, Texas and Wyoming. These states are also among those with the highest rates of financing on used vehicles, according to the Experian Automotive market report, while used vehicles sold in states with lower average balances are less likely to be financed.
Generation X Carries the Largest Auto Loan Balances
Younger generations are growing their balances faster than other generations. Balances for millennials are up just slightly above the overall average of $22,612. And while Generation Z—the youngest generation included in our analysis—have lower balances, those averages are growing the most in 2022 as more get behind the wheel of their own car for the first time.
| Average Auto Loan Balance by Generation | |||
|---|---|---|---|
| 2021 | 2022 | Change | |
| Generation Z (18-25) | $17,241 | $19,223 | +11.5% |
| Millennials (26-41) | $20,855 | $23,045 | +10.5% |
| Generation X (42-57) | $23,855 | $25,764 | +8.0% |
| Baby boomers (58-76) | $19,972 | $20,736 | +3.8% |
| Silent generation (77+) | $15,063 | $15,412 | +2.3% |
Source: Experian data from Q3 of each year; ages as of 2022
Generation X has the largest average auto balance among the generations, and by quite a margin. The Generation X balance of $25,764 is $2,700 more than the next-highest generation, millennials, and more than $10,000 than those of the oldest consumers.
What 2023 May Have in Store for the Auto Finance Market
Waiting for Moderating Prices in a Slowing Market
While we can't know for sure, many are forecasting increased auto sales in 2023 despite rising financing rates. However, we're still buying and financing fewer cars than in years past. Research from J.P. Morgan expects U.S. vehicle sales to increase to 14.5 million in 2023, up from 14 million in 2022. But that's still below the 15 million or so vehicles that sold annually for much of the 2010s. Until then, expect auto sellers to have the upper hand in pricing negotiations. While consumers may no longer be paying more than the sticker price, as was the case for much of the pandemic, dealers are still offering prospective car buyers fewer incentives than in previous years.
Buying New Versus Used Remains Primary Consideration
More consumers finance new vehicle purchases than used cars. In 2022, most new car purchases—around 80%—were financed, versus around 40% for used cars, according to research conducted by Experian Automotive.
Typically, newer cars can be financed at lower APRs than used cars, though that's possibly little comfort, as the average amount financed for new cars was $41,665 in September 2022, according to Experian Automotive. As of September 2022, the average APR for new cars was 5.16%, while the average used car APR was 9.34%. Average loan terms of both new and used cars are similar: 70 months for new vehicles, and 68 months for used.
Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.
FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.
