December 9, 2023

Car Auto Finance

Car Auto Finance FOR Everyone

States With The Highest Car Loan Balances

Average car loan delinquency rates, interest rates and payments aren’t truly influenced by geographical location. Rather, they are determined by a driver’s credit score and history, income, debts and the loan amount and term. But the statistics broken out by location do reveal typical habits of drivers in each state.

Over the past year, auto delinquency rates have been on the rise — which means they’re returning to normal pre-pandemic levels, according to TransUnion. This increase is primarily due to the resurgence of delinquencies following the end of pandemic-related relief.

On top of this, vehicle shortages caused more demand coupled with less supply — meaning high costs to buy and finance. Overall, loan balances have grown by 7 percent, year-over-year, to $1.583 trillion in 2023, according to Equifax. So as interest rates and delinquencies increase, consider where your home state falls in the shuffle.

  • The average monthly payment for new cars is $725, according to Experian.
  • The average monthly payment for used cars is $516, according to Experian.
  • New cars cost an average of $48,275, according to Kelley Blue Book.
  • Average loan term for new cars is 68.64, according to Experian.
  • Average loan rate for new cars is 6.58 percent, according to Experian.
  • Average loan term for used cars is 67.42 months, according to Experian.
  • Average loan rate for used cars is 11.17 percent, according to Experian.
  • Drivers pay an average down payment of $6,956, according to Edmunds.

An auto loan balance is the remaining amount a driver has to pay on their loan. State average balances range from around $3,700 to upwards of $7,000.

The average car loan balance across the country is $5,470, according to the Federal Reserve. Below are the ten states with the highest car loan balance in the country.

State Average car loan balance
Texas $7,610
Louisiana $6,710
Florida $6,370
Georgia $6,360
New Mexico $6,310
Arizona $6,040
Utah $6,040
Nevada $6,030
Oklahoma $6,000
Mississippi $5,990

These higher balances are partly due to a few macro-environmental issues across the country and are not just state specific. One major factor is the issue of supply versus demand. Although vehicle inventory has been increasing in the last few months, the number of units available in the country is still below pre-pandemic levels due to supply chain issues. This caused the cost of available cars to rise — forcing drivers to finance more.

Along with this, drivers have been choosing longer loan terms to lower the monthly cost of their car payments. Average used vehicle terms in the first quarter of 2023 reached 67.42 months. New vehicle terms told a similar story, with drivers financing for an average of 68.64 months.

State Average used car APR Average monthly payment
Texas 11.94% $720
Louisiana 12.10% $740
Florida 11.24% $697
Georgia 12.41% $748
New Mexico 12.21% $727
Arizona 11.18% $693
Utah 9.58% $669
Nevada 12.12% $719
Oklahoma 11.17% $715
Mississippi 13.62% $731

Sources: iSeeCars and Edmunds

The average monthly payment figures for each state were calculated using a combination of the average used car price and interest rate for each state, along with the national average loan term.

Drivers can take anywhere between 24 and 60 months to pay off their vehicle, some even taking up to eight years — which can be a risk. A longer term lowers the monthly cost, but it leads to a higher cost overall.

The interest rate that you pay for your vehicle is based on a variety of factors, such as your credit, the vehicle type and the terms you choose. On average, drivers can expect to pay around 6.58 percent for new cars and 11.17 percent for used, according to the first quarter data from Experian. Below are the average APRs as of June 28, 2023, based on a Bankrate study.

New car 7.08% 7.11% 7.14%
Used car 7.57% 7.68% 8.43%

State Average used car price
Texas $35,061
Louisiana $35,893
Florida $34,519
Georgia $36,016
New Mexico $35,189
Arizona $34,413
Utah $34,580
Nevada $34,859
Oklahoma $35,509
Mississippi $34,130

Source: iSeeCars

Vehicle prices hit record highs last year — and prices have kept rising steadily since then. New vehicles cost upwards of $48,200, according to Kelley Blue Book.

Fortunately, used vehicle prices have eased up. The average price of a used car was $25,510 in February — a $633 decrease from the previous month, according to Kelley Blue Book. In terms of vehicle types, SUVs remain the most popular, surpassing 60 percent of financed vehicles in the first quarter of 2023, according to Experian.

State Average delinquency rates
Texas 4.47%
Louisiana 5.44%
Florida 4.23%
Georgia 4.96%
New Mexico 4.83%
Arizona 3.73%
Utah 1.73%
Nevada 4.32%
Oklahoma 4.02%
Mississippi 6.10%

Source: The Federal Reserve

Texas, which has the highest average car loan balance, does carry high average delinquency, but not the highest out of the top states. Mississippi leads with 6.10, much higher than the national averages displayed above.

Interestingly though, TransUnion found that consumers continue to value their auto loans in line with other financial commitments. Just behind mortgages and far higher than credit cards, drivers prioritize getting vehicle payments in.

When it comes to prioritizing your payment, the key is preparedness. To do this, you must only finance what you can afford. The best way to do this is to calculate your expected monthly payment along with what that accrued interest will look like during the lifetime of the loan.

State Average auto loan balance
Hawaii $4,130
Massachusetts $4,150
Connecticut $4,170
New York $4,230
Wisconsin $4,410

Source: The Federal Reserve

Hawaii takes the gold medal for lowest average auto loan balance, followed closely by the home of the Mayflower, Massachusetts. These states carry averages dramatically lower than the national average of $5,470. But as explained, the auto loan balance is independent of ZIP code and rather relates to the typical background of each state.

Financial literacy, income and cost of living all play important roles. When looking at the states with the lowest balances, for example, three out of the five hold some of the highest median household income in the country, according to the Census Bureau. When diving deeper, average credit scores also tend to be higher.

Hawaii’s average FICO score is 732, falling under the good category, according to Experian. With the remaining states carrying similarly competitive averages.

Frequently asked questions

  • The steps to refinance your auto loan are fairly similar to the ones you took to get your first loan. You must review your current loan — paying close attention to current interest rates and terms — then shop around at a few lenders and sign off on your new loan.
  • This number varies by lender. Generally, your vehicle can be repossessed directly after you default. But most lenders will allow multiple months, usually up to 120 days.
  • There are many ways to get financing for your vehicle. Most commonly, you can borrow from a bank, credit union or online lender. But no matter the destination, consider these steps to get the best deal:

    • Shop around and compare offers from at least three lenders.
    • Apply for loan prequalification to get a firm grasp on expected payments.
    • Fill out a loan application with accurate information about your credit history and vehicle details.
    • Start paying your loan each month.
  • Many factors contribute to determining interest rates, like credit history, vehicle age and chosen loan term. The average interest rate for new and used cars was 6.58 percent and 11.17 percent, respectively, according to Experian. Consider these averages when shopping, but remember that the most competitive rates will be given to those with strong credit.