Record financing costs
New vehicles cost an average of $47,936 in October 2023, according to Kelley Blue Book (KBB). Vehicle prices skyrocketed during the COVID-19 pandemic, affected by supply chain issues, a semiconductor shortage, and auto plant shutdowns. When car buyers can’t save enough for a cash payment, they frequently turn to borrowing.
Although data from Experian indicates fewer buyers are financing vehicles, nearly 80% of new vehicles sold in the first half of 2023 were financed.
Edmunds reports that the number of buyers with monthly new-car payments of $1,000 or more is increasing. In the third quarter of 2023, 17.5% of buyers had four-figure car payments, up from 17.1% in the previous quarter.
Also in the third quarter, the average amount financed for new vehicles was $40,149, and $29,328 for used vehicles — down from the previous quarter.
Auto-loan interest rates are at their highest since the Great Recession, according to third-quarter (Q3) data from Edmunds.
The average annual percentage rate (APR) is currently 7.4% for new vehicles and 11.2% for used ones, Edmunds reports. At those rates, the average monthly car payment for a new vehicle is $736 — an all-time high — while the average for used vehicles is $567.