Auto Loan Interest Rates Hit Highest Level in a Decade, According to Edmunds Analysis

SANTA MONICA, Calif., March 1, 2019 /PRNewswire/ -- Interest rates on new vehicles are expected to hit their highest level since 2009 in February, according to the car shopping experts at Edmunds. The annual percentage rate (APR) on new financed vehicles averaged 6.26 percent in February, compared to 5.19 percent last year and 4.56 percent five years ago. Edmunds experts attribute this in part to automakers reining in zero percent financing deals and overall low interest rate offers. In February, zero percent finance offers constituted 3.22 percent of all financed deals compared to 8.28 percent last year and 6.95 percent five years ago, and only 18 percent of shoppers received an APR under 3 percent in February, compared to 29.91 percent last year, and 45.49 percent five years ago. Additionally, the average transaction price of a new vehicle is expected to remain elevated, hitting $36,331 in February.

"Shopping conditions are pretty unfavorable for consumers across the board, and even those with good credit are having trouble finding compelling finance offers," said Jeremy Acevedo, Edmunds' manager of industry analysis. "As rising vehicle costs and interest rates continue to compromise affordability, more shoppers might find themselves priced out of the new vehicle market."

Although credit conditions continue to tighten, Edmunds experts note that shoppers who do finance new car purchases are refusing to budge on the vehicles that they want. The average amount financed for a new vehicle hit $32,071 in February compared to $31,313 in 2018 and $24,477 five years ago, which Edmunds analysts note reflects sustained shopper preferences for pricier trucks and SUVs.

"The consumer appetite for SUVs and trucks grew out of a time when it was far more affordable to buy these vehicles, and even now that finance conditions aren't nearly as friendly, shoppers still refuse to settle for less car," said Acevedo. "With auto loan delinquency on the rise, it's more important now than ever for consumers to understand the risks associated with financing more than what you can afford."

More insight into recent auto industry trends can be found in the Edmunds Industry Center at http://www.edmunds.com/industry-center/.

About Edmunds

Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America's best workplaces by Fortune and Great Place to Work, Edmunds is based in Santa Monica, California, and has a satellite office in Detroit, Michigan. Follow us on Twitter, Facebook and Instagram.

CONTACT:
Talia James-Armand
Senior Manager, Public Relations
[email protected]
310-309-4900
http://edmunds.com/about/press

SOURCE Edmunds

Related Links

http://www.edmunds.com