New-car prices are way up, of course, but that’s not the only reason why the average monthly payment for a new car today is almost $600, a 25 percent increase from what it was 10 years ago. The other reason is that there isn’t good oversight of lending practices. As Consumer Reports put it, the auto lending industry “operates in a regulatory morass,” and as a result, many consumers whose credit is just fine are finding themselves stuck with subprime loans at high interest rates.
CR’s lead example in its article about the research describes a borrower with “sterling credit” who bought a new 2018 Toyota Camry two years ago and will end up paying around $59,000 for it by the time the loan is paid off in 2025. While the average loan for a person with that buyer’s credit score was at 4.5 percent, the loan they got had a 19 percent APR.