New-Vehicle Buyers ‘Stretched to Financial Limits’ in Q2 2024, According to Edmunds Experts

SANTA MONICA, Calif., July 02, 2024 (GLOBE NEWSWIRE) -- 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)

Quarterly Used-Car Finance Data
(Averages)

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 Newsweek, Fortune, Great Place to Work and Built In, Edmunds is based in Santa Monica, California. Follow us on TikTok, Twitter, Facebook and Instagram.

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