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Car-Buying Grabbing More Wallet Share

Report shows car loan amounts, down payments rising along with interest rates.

January 9, 2023
Car-Buying Grabbing More Wallet Share

Sixteen percent of consumers who financed a new car in the fourth quarter have monthly payments of at least $1,000, a record.

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IMAGE: Getty Images/GrvPixels

1 min to read


A new report quantifies the rising cost of consumer car loans, which are getting more and more expensive.

Car-shopping research website Edmunds shows that about 16% of consumers who financed a new car in the fourth quarter have monthly payments of at least $1,000, the highest ever level. That compared with 10.5% a year earlier and 6.7% in the fourth quarter of 2020.

Even some used-car buyers committed to the same payment segment – a record 5.4%, up from about 4% year-over-year and from 1.5% two years earlier.

Edmunds also reported that down payments on car purchases are rising. The average for new and used cars also made records in the quarter, jumping to $6,780 and 3,921, respectively.

Rising interest rates are a big factor in the increasing cost of buying a vehicle. The average annual percentage rate on new cars reached 6.5% in the fourth quarter, Edmunds reported, up from 5.7% quarter-over-quarter and from 4% year-over-year.

Meanwhile, more consumers are shifting from leases to purchases. Edmunds says the new-vehicle lease penetration rate dropped from 29% in the fourth quarter of 2019, just before the pandemic, to 16% in the recently ended quarter. Among luxury-vehicle shoppers, it fell from 53% to 26%.

LEARN MORE: Shedding Light on the Current Auto Lending Picture

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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