Interest rates on new-vehicle loans fell to a six-month low in July as automakers ramped up summer zero-percent finance deals, according to a new analysis from Edmunds. The annual percentage rate on new financed vehicles averaged 4.8 percent in July, down from 5 percent in June. The percentage of purchasers who took advantage of zero-percent financing grew to 11.3 percent of buyers in July, up from 9.5 percent in June and 10.2 percent a year ago.
"Zero-percent finance deals are common in the summer, but car buyers can save even more this year," said Jessica Caldwell, Edmunds executive director of industry analysis. "Even though interest rates were lower on average in July than at any time in the past six months, they're still hovering at highs not seen since 2009. These higher interest rates make zero-percent financing a big carrot for dealers seeking to lure car shoppers."
Among the zero-percent financing offers in July were deals on several 2017 Cadillac models, including the Cadillac ATS. The 2017 Chevrolet Impala and 2017 Ford Fiesta also were available at zero-percent financing for qualified buyers. Some of those deals continue this month and, in the case of the Fiesta, will be available until October.
Overall, interest rates on auto financing have been higher in 2017 than in recent years. July's average APR was up 5.6 percent year over year, and was 14.2 percent higher than it was five years ago.
"In today's declining market, every sale counts," Caldwell said. "We anticipate automakers will continue to ramp up zero-percent finance offers as we get deeper into the summer sell-down season."