Auto loan interest rates hit post-2009 high
Surging interest rates have pushed auto loans to their highest point since 2009.
The days of getting a 0%-interest car loan are about over, and that’s making shopping for a new vehicle more expensive for many Americans.
In just a month’s time, the average interest rate on a new car loan jumped from 5.2% to 5.7%, according to an Edmunds analysis using data from March. That puts auto loan interest rates at a level not seen since the early days of the Great Recession.
Interest rates have accelerated quickly, as the average was 5% a year ago and 4.4% five years ago. One of the main reasons for the surge, Edmunds concludes, is the abandonment of 0% interest.
“Some of the largest-volume brands like Chevrolet, Ford, Nissan and Toyota are demonstrating the largest drop in 0% loans year over year,” said Edmunds executive director Jessica Caldwell. “This goes to show how the cost of lending has become increasingly more pricey, and 0% financing, while still a desirable incentive, no longer adds the same wow factor for consumers like it used to.”
Over the past year, 0% loans have plunged from a market share of 11.4% to a projected 7.4%. And the lowest-interest loans aren’t faring much better. Loans between 2% and 4% have dropped from 14.1% of all auto loans to 8.9%, while rates of 4% to 7% are becoming much more commonplace – rising from 27.6% a year ago to now 34.5%.
The average in new car financing is just shy of 70 months (up six months since 2017) and 5.7% with a down payment of nearly $4,000 (up $173) and monthly payment of $527 (up $18). Part of the reason may also be that new car prices have accelerated to an all-time high.
For used vehicles, the financing average is slightly higher this year at 67.2 months and 8.7% with a down payment of $2,625 (up $118) and monthly payment of $393 (up $11).
In a rising interest-rate environment, finding and comparing the lowest possible APRs could save you money on a new or used car, and our guide to auto loans can help you understand the rates, fees and prices that will affect your bottom line.