Monthly new car payments in the US, 1971 to 2025
A typical new car payment in 1971 was about 10% bigger than today, adjusted for inflation. The five-decade arc captures inflation and longer terms.
Source: Federal Reserve Board, G.19 Consumer Credit
Transportation expenses are the second-biggest basic living cost in the good ol' U.S. of A. Today, Americans spend around 17% of their monthly budgets on transportation. That comes out at around $1,113, and makes the largest share after housing, according to Ramsey Solutions.
This includes necessities like gas, insurance, repairs and even airline tickets, but most of it comes from car loans. It made me wonder how the situation has changed over the years. As I'm naturally more disposed towards being pessimistic, I expected things to have changed for the worse.
After some small amount of digging, I decided to use the Federal Reserve's Consumer Credit - G.19 Report, and using their data made a visualization that attempts to answer the question.
Monthly new car payments in the US, 1971 to 2025
Estimated monthly payment on a typical new car loan at U.S. finance companies, in constant 2025 dollars
Quarterly. 1971 Q2 → 2025 Q4. Monthly payment computed from each quarter’s average amount financed, maturity, and finance rate using the standard amortizing-loan formula, then converted to constant 2025 dollars using each quarter-end month's CPI-U. Sources: Federal Reserve Board G.19 Consumer Credit (finance-company series; legacy pre-2008 chained at 2008-Q1) and BLS / FRED CPIAUCNS.
It took me a moment to unpack all the data I found and orient myself. In the graph above I've used info from "car loans by finance companies" section. To even start we need to understand what finance companies are. Clearly, they are important, and the G.19 Report notes the data covers most of both types, captive and non-captive.
Captive finance companies, according to Investopedia, are wholly-owned subsidiaries of car manufacturers such as Ford or General Motors. Among other things, they offer auto loans to consumers.
More broadly, they are owned in part or in whole by a parent company, and they finance retail purchases of that parent firm's products. The other kind, non-captive companies, are banks, fintechs, or lending subsidiaries of insurance companies.
Over time, the share of captive-originated financing has remained steady at around 70%, reports European DataWarehouse.
Now that that's cleared up, let's focus on the actual stats the report gives us. Three main things. Interest rates, Maturity and the Amount financed.
Interest rates are the amount charged for borrowing money, while maturity is the expected time until the loan is fully paid back.
Finally, the amount financed is the loan principal, and importantly, doesn't include interest and upfront fees.
Doing the math
Now that we understand these terms, I used them to calculate monthly payments in a given period using the standard amortizing-loan formula.
M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1)
M is the monthly payment, P is the amount financed, r is the monthly interest rate (annual rate divided by 12), and n is the loan maturity in months. Each quarter's three reported averages are plugged in, and the result is plotted.
For now, let's take a look at the beginning and the end. Back in '71, people would take out a car loan for around $3,045, and they were expected to pay it off in a bit less than 3 years, with an interest rate of 12%.
Jump ahead more than fifty years and the picture looks a lot different. A person in 2025 could take out a car loan for $41,742, and pay it back in about five and a half years, at a 6% interest rate!
Plug those numbers into the standard amortizing-loan formula, and the results seem shocking. In '71 the monthly payment was around $103.73, while in 2025 it was $745.60. This seems like a huge difference, but we need to remember these are nominal values. After adjusting for inflation, it turns out they had it harder back in '71, when they had to pay $822.54 in today's dollars, at double the interest rate.
Looking at the broader picture, there are three things worth noting, even if I'm hesitant to draw conclusions. Over the past 54 years the average car loan grew by about 72.9%. Cars got more expensive over the years. The loan term also almost doubled, growing by 88.9%. At least interest rates were halved in the same period.
Today the real monthly payment is actually about 10% lower than it was in 1971. Even if the loans only got bigger, the longer terms and lower interest rates almost entirely absorb that 72.9% increase in real loan size. But that doesn't change the fact people are stuck for almost double the time until they pay it off.
A note on the data
The main chart shows monthly payment in constant 2025 dollars. Each quarter's nominal payment is computed from that quarter's average amount financed, maturity, and finance rate using the standard amortizing-loan formula, then converted using the BLS Consumer Price Index for All Urban Consumers (CPI-U), scaling each quarter by its quarter-end month's CPI relative to the 2025 annual average.
The underlying loan terms are chained from two Federal Reserve datasets at 2008-Q1, marked on the chart with a thin dashed line.
A few methodological caveats worth knowing: each of the three input series is a quarterly average across many loans, and computing a single payment from those averages is not exactly the same as the average payment of all individual loans (the amortization formula is non-linear).
The Fed's "finance rate" is also similar in spirit to APR but methodology differs slightly. And the chart shows loan-only payment, no taxes, registration, insurance, or maintenance.
Thanks for reading.