Auto Loan Interest Rates Hit Nine-Year High in June, According to Edmunds
Rates rise 17 percent since January as automakers curtail zero percent financing offers
SANTA MONICA, Calif., July 3, 2018 /PRNewswire/ -- Auto loan interest rates are expected to climb to their highest level since 2009 for the second month in a row in June, according to the car shopping experts at Edmunds. The annual percentage rate (APR) on new financed vehicles averaged 5.82 percent in June, compared to 4.96 percent in June 2017 and 4.10 percent in June 2013. Edmunds analysts point to the most recent Fed rate hike as a contributing factor toward this increase, and note that June marks a 17 percent total increase since January 2018, when APRs averaged just below 5 percent.
"Auto loan interest rates have been steadily on the rise this year and we don't see them going down anytime soon, which could mean trouble for automaker sales through the end of the year," said Jeremy Acevedo, Edmunds' manager of industry analysis. "While some shoppers may take this as a cue to purchase new vehicles now while rates are still somewhat favorable, we're getting dangerously close to a tipping point. Shoppers with average or subprime credit may end up putting off purchases as financing vehicles get increasingly more expensive."
Edmunds experts note that zero percent financing loans reached their lowest level in nine years in June, constituting just 5.6 percent of total finance deals, compared to 9.47 percent in June 2017 and 10.55 percent in June 2013.
"June typically boasts a substantial amount of zero percent financing deals, so this is a big red flag," said Acevedo. "This might be a sign that access to cheap and easy credit — a postrecession hallmark that we've all grown so accustomed to — could be officially over. But there's hope yet — the true indicator will be whether zero percent deals materialize through the rest of the summer selling season, which automakers typically rely on to clear outgoing model-year inventory."
More insight into recent auto industry trends can be found in the Edmunds Industry Center at http://www.edmunds.com/industry-center/.
| New-Car Finance Data |
|||
| June 2018 |
June 2017 |
June 2013 |
|
| Term |
68.85 |
69.34 |
65.59 |
| Monthly Payment |
$533 |
$517 |
$465 |
| Amount Financed |
$30,896 |
$30,945 |
$26,940 |
| APR |
5.82 |
4.96 |
4.10 |
| Down Payment |
$3,995 |
$3,687 |
$3,402 |
| Used-Car Finance Data |
|||
| June 2018 |
June 2017 |
June 2013 |
|
| Term |
66.94 |
66.91 |
64.33 |
| Monthly Payment |
$398 |
$383 |
$367 |
| Amount Financed |
$21,610 |
$21,142 |
$19,461 |
| APR |
8.21 |
7.64 |
7.87 |
| Down Payment |
$2,612 |
$2,453 |
$2,165 |
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
Senior Manager, Public Relations
[email protected]
310-309-4900
http://edmunds.com/about/press
SOURCE Edmunds
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