Edmunds.com: APRs Hit an All-Time Low for Car Buyers in December 2010
SANTA MONICA, Calif. — January 20, 2011 — December car buyers enjoyed the lowest-ever annual percentage rates (APRs) on their auto loans, according to data gathered by Edmunds.com, the premier online resource for automotive information. The average auto loan carried an APR of 4.16% in the final month of the year, down 0.33 points from November and 0.55 points from December 2009. An estimated 15.4% of all auto loans carried zero interest, the third highest monthly pace in 2010.
And while so many of last month's car buyers enjoyed no interest rates on their new vehicle loans, many more still managed to avoid exceptionally high APRs. Only 4.0% of all auto loans carried an APR higher than 10% in December, the lowest proportion seen by Edmunds.com since it started gathering data in this category in 2004.
A major contributor to the low December interest rates was the luxury market, which is generally driven by an affluent, fiscally stable set of consumers. The average APR for financed sales of the top seven luxury brands last month was 2.9%, the lowest monthly rate of 2010. This capped a year in which the average APR in the luxury segment steadily dropped each month since February. (Earlier this week, Edmunds.com reported that Lexus led all luxury auto brands for the eighth year in a row, thanks in part to its increased incentive offers.)
"December brought many financially sound consumers back into the market," said Ivan Drury, analyst at Edmunds.com. "Deal-seekers are generally cautious about their spending and they likely wouldn't enter the market unless their confidence was complemented by the right incentives."
Buick led all makes with the highest rate of financed sales at 0% APR. More than half of the GM brand's financed sales generated no-interest loans, its highest monthly showing since June 2008. Toyota placed second for the month with 40% of their financed sales at 0% APR, while Cadillac placed third in December with one out of every three financed sales enjoying 0% APR.
The attractive financial environment combined with increased consumer confidence also drove more shoppers to lease new vehicles. December's lease penetration climbed to 23.6%, the highest monthly rate since November 2005.
Consumers can learn more crucial information about the current environment for car financing by reading "Car Financing in a Recovering Economy" on Edmunds.com.
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Edmunds.com Inc. publishes Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive information, launched in 1995 as the first automotive information Web site and hosts the most established automotive community online. Its mobile site, accessible from any smartphone at www.edmunds.com, makes car pricing and other research tools available for car shoppers at dealerships and otherwise on the go. InsideLine.com is the most-read automotive enthusiast Web site. Its mobile site, accessible from any smartphone at www.insideline.com, features the wireless Web's highest quality car photos and videos. AutoObserver.com provides insightful automotive industry commentary and analysis. Edmunds.com Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit. Follow Edmunds.com on Twitter@edmunds and fan Edmunds.com on Facebook at http://www.facebook.com/edmunds.