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Why are car loans so high?
Is there a reason that car loan rates are so high right now? I read that car loans have gotten more expensive in the last year or so, and I’m not sure why that would be.
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Understanding the driving reasons behind economic change can be challenging. But one of the biggest reasons for the increase in car loan payment costs is the increased demand for large SUVs, pickup trucks, and other expensive vehicles.
Since car loan costs depend on car prices, the average loan payment is now higher because of this increase. That said, even though monthly loan payments are higher on average, overall auto loan rates have actually declined since 2020.
Similarly, the average APR for car loans has also dropped in the last few years—peaking at 4.96% and dropping to 3.87% in 2021. In short, car loan prices are actually lower than they used to be!
But if you’re still worried about the price of car loans, offset the cost by saving on car insurance with
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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