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Edmunds: Down Payments Reach Record Levels in May

Car buyers are putting down $504 more on a new-vehicle purchase than they did five years ago. But with buyers purchasing pricier cars and interest rates on the rise, something has to give, Edmunds.com analysis said.

by Staff
June 5, 2017
Edmunds: Down Payments Reach Record Levels in May

 

2 min to read


SANTA MONICA, Calif. — As interest rates climb and consumers stretch to afford increasingly expensive cars, buyers are showing signs of digging deep to put more money down up front, according to a new analysis from Edmunds.

The amount of money car buyers put down to buy a new vehicle in May increased by 6.5%, or $233, from a year ago to $3,801. That’s also up $504 from five years ago. Down payments were up slightly on the used-vehicle side as well, as buyers put down, on average, an additional $93 in May compared to a year ago.

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"Buyers want pricier cars with more bells and whistles, leading to the troubling trend of trading longer loan terms for lower monthly payments," said Edmunds Executive Director of Industry Analysis Jessica Caldwell. "But now that interest rates are also on the rise, something has to give. In our increasingly credit-based culture where consumers are willing to finance everything from cellphones to vacations, more money up front shows car buyers aren't completely sacrificing practicality in order to get the cars they really want."

The Edmunds analysis found that while the average loan term, monthly payment and amount financed on new vehicles have grown steadily over the past five years, each was only up about 1% in May compared to last year. On the used side, all three metrics show slight dips in May.

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