Average New Car Payment Reaches Record High $736 Per Month

Monthly new vehicle payments continue to climb.  In a new Edmunds third quarter analysis,  the average new vehicle payment reached an all-time high of $736 in the third quarter.  The number of people who financed a new vehicle for more than $1,000 increased to a new all-time high of 17.5% from its previous record of 17.1% last quarter.

Edmunds researchers say swollen interest rate for record financing figures in both the new and used markets, making things challenging for many consumers.

Q3 Transaction Data

Edmunds Q3 vehicle transaction data reveals:

• The average annual percentage rate (APR) for both new and used vehicles continued to climb in Q3: New-vehicle APR ticked up three percentage points since last quarter to 7.4%, while used-vehicle rates jumped two points to 11.2% since Q2. Both new and used APRs reached points not seen since the Great Recession: New-vehicle APR last hit 7.4% in Q2 2007 (7.5%), and used-vehicle APR is the highest since Q4 2007 when it climbed to 11.4%.
• The share of consumers who financed a new vehicle with a monthly payment of $1,000 or more increased to a new all-time high of 17.5% in Q3 2023 from its previous record of 17.1% last quarter.
• The average monthly payment on a new vehicle in Q3 reached an all-time peak of $736, up slightly from $733 in Q2. For used vehicles, average down payment also reached a record high in Q3, up to $4,111 from $4,107 in Q2 2023.
• The average amount financed across new and used vehicles ticked slightly lower in Q3, down $207 to $40,149 for new since Q2 and down $337 to $29,328 for used in the same timeframe.

"Spiked interest rates remain the biggest impediment to affordability in both the new and used car markets today. And while the Federal Reserve held off on raising the federal funds rate in their most recent session, the expectation is rates will remain high or even increase slightly through the end of the year, which may help tame inflation in the long run but is inflating monthly payments for now," said Jessica Caldwell, Edmunds' head of insights. "Looking ahead, the ongoing UAW strike could wipe out any inroads made on inventory and the return of incentives, further elevating pricing, at least among Detroit automakers."

Zero-Percent Financing Deals Vanish

Edmunds analysts took a closer look at the share of new-vehicle sales with 0% financing from 2019 through Q3 2023 and uncovered a notable decline in transactions involving these extremely subvented rates relative to early stages of the pandemic. According to Edmunds data, 0% financing reached a peak in Q2 2022 at 24.2% of all sales but dropped significantly to reflect just 1.1% of transactions in Q3 2023.

"Zero-percent financing commercials might still be airing to draw shopper attention, but the reality is those deals are all but gone for the average car shopper," said Ivan Drury, Edmunds' director of insights. "The largest segment of consumers financing a new car today has a 7.9% APR. That's a far cry from those spring 2020 pandemic deals of 0% financing for 84 months that drove significant sales of large trucks and SUVs."

Even if 0% financing deals aren't around, Edmunds analysts say shoppers can still find some deals out there across a variety of automakers depending on availability. 

Quarterly New-Car Finance Data
(Averages)

Source: Edmunds Press Release.

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