New-Vehicle Buyers ‘Stretched to Financial Limits’ in Q2 2024, According to Edmunds Experts
July 02 2024 - 9:00AM
Trends in Q2 auto finance data point to new-vehicle buyers
stretched to their financial limits, according to the car shopping
experts at Edmunds. While inventory has improved, which has led to
some discounting, vehicle prices remain elevated, and lingering
high borrowing costs have only made buying a new vehicle more
challenging.
New data from Edmunds reveals consumers who financed new vehicle
purchases in the second quarter of 2024 are:
- Contending
with ongoing elevated interest rates: The average new-vehicle
APR in Q2 2024 climbed to 7.3%, an increase from 7.1% in Q1. This
marks the sixth consecutive quarter that new-vehicle APRs have
hovered above 7%.
- Taking on
longer loan terms to mitigate higher prices: Roughly 70% of
new-vehicle loans had terms over 60 months in Q2 2024. The average
new-vehicle loan term in Q2 2024 was 69 months, the highest point
since the end of 2022 when average new-vehicle interest rates sat
under 7%.
- Not putting
as much money down and seeing monthly payments spike to all-time
highs: The average new-vehicle down payment dropped to $6,579,
the lowest mark Edmunds has seen since Q3 2022. Edmunds analysts
note this has contributed to the average monthly payment reaching
an all-time high in Q2 2024 of $740, up from $735 in the prior
quarter and $733 a year ago.
- Taking on
monthly payments over $1,000 at near-record levels: The share
of consumers taking on loans with new-vehicle monthly payments of
$1,000 or more was 17.8% in Q2 2024, just shy of the record 17.9%
share in Q4 2023, which Edmunds analysts note is a quarter when
vehicle prices are seasonally higher.
“High interest rates continued to be a heavy drag on new-vehicle
sales growth in the second quarter,” said Jessica Caldwell,
Edmunds’ head of insights. “In theory, improved inventory and
growing incentives should paint a more consumer-friendly picture of
the market, but the reality is most Americans can’t buy their cars
with cash, and increased borrowing costs continue to be a major
roadblock when buying a new vehicle.”
Edmunds experts say the news of CDK Global potentially restoring
services to dealers nationwide this week should come as a bit of
relief to consumers intent on financing a vehicle purchase this
July 4 holiday weekend.
“If all goes as CDK says it will, shoppers can hopefully expect
business as usual — and less pen and paperwork — at their local car
dealer this weekend. There may even be added incentives for dealers
looking to make up ground on lost sales the past few weeks,” said
Ivan Drury, Edmunds’ director of insights. “But while the
transaction may be smoother, finding good deals still takes hard
work. The advice for locking in a good deal remains the same: Do
your research before you step foot in the dealership. And while
incentives are growing and those low APR offers look enticing, make
sure they are for a length of time that makes a payment palatable
for your budget.”
Edmunds analysts suggest car shoppers leverage tools such as the
Edmunds Car Loan Interest (APR) Calculator to better evaluate the
total amount of interest they’re committing to pay on their next
car loan. They also suggest keeping a close eye on automaker and
dealer finance incentives.
Quarterly New-Car Finance
Data(Averages)
| |
2024
Q2 |
2023
Q2 |
2024
Q1 |
|
Term |
69.0 |
68.5 |
68.3 |
| Monthly
Payment |
$740 |
$733 |
$735 |
| Amount
Financed |
$40,873 |
$40,356 |
$40,427 |
|
APR |
7.3 |
7.1 |
7.1 |
| Down
Payment |
$6,579 |
$6,823 |
$6,682 |
Quarterly Used-Car Finance
Data(Averages)
| |
2024
Q2 |
2023
Q2 |
2024
Q1 |
|
Term |
69.7 |
70.2 |
69.7 |
| Monthly
Payment |
$552 |
$569 |
$546 |
| Amount
Financed |
$28,166 |
$29,665 |
$27,774 |
|
APR |
11.5 |
11.0 |
11.7 |
| Down
Payment |
$4,140 |
$4,106 |
$4,133 |
About EdmundsEdmunds guides car shoppers online from
research to purchase. With in-depth reviews of every new vehicle,
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consumer and automotive market insights, Edmunds helps millions of
shoppers each month select, price and buy a car with confidence.
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###
Talia James-Armand
Edmunds
310-491-8738
pr@edmunds.com