Affordability of New and Used Vehicles Falls
Interest rates increasing the costs, with no end in sight, Edmunds finds.

Several record highs were set in the third quarter, including the average used-vehicle down payment of $4,111.
IMAGE: Pexels/Raten Kauf
In the third quarter, vehicle borrowing costs reached highs last seen during the Great Recession, while average monthly payments hit records, according to Edmunds findings.
The average annual percentage rate for new vehicles rose three percentage points quarter-over-quarter to 7.4% as the used-vehicle average APR increased two points to 11.2%.
"Spiked interest rates remain the biggest impediment to affordability in both the new and used car markets today,” said Edmunds Head of Insights Jessica Caldwell.
Meanwhile, the percentage of borrowers with monthly payments for a new vehicle of at least $1,000 reached a record high of 18%, surpassing the previous record of 17% in the second quarter. The average monthly payment also broke a record at $736.
The average down payment on a used vehicle set a record, too, at $4,111, Edmunds said.
The end of the vehicle affordability quandary may not be in sight, Caldwell said, citing potential additional interest rate increases and the United Auto Workers strike in Detroit. The strike, she pointed out, could "wipe out any inroads made on inventory and the return of incentives, further elevating pricing,” at least for the big three automakers based there.
Zero-percent financing, though still being advertised in places to “draw shopper attention,” has all but disappeared, Edmunds pointed out, representing just 1% of third-quarter transactions after peaking in the second quarter of last year at 24%.
Originally posted on Auto Dealer Today
More Auto Finance

July Was Hot for Auto Borrowers
Credit proved readily available for many, but most loans left buyers in negative territory, Cox Automotive said.
Read More →
Dealer Lender Preferences Revealed
When lenders provide consistent, fast service, their overall satisfaction scores with dealers greatly improve, according to JD Power research.
Read More →
Auto Refi Savings Surge
Consumers with 84-month auto loan terms who refinanced saved the most on monthly payments, according to a new report by auto refinancing provider Caribou.
Read More →
Subaru Enters Lending Business
The automaker follows other brands in adding captive financing in the U.S., and says the move will strengthen its position here.
Read More →
Positive Equity Reaches Record High
Mainstream vehicle owners who bought a car seven years ago are likely to have positive equity when trading in for a new vehicle, according to second-quarter Edmunds data.
Read More →
Dealerships Are Paying the Price for Extended Car Loans
Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.
Read More →
Trade-Ins in Negative Equity Reach New Heights
As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.
Read More →
Auto Credit Plentiful
June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.
Read More →
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →