SANTA MONICA, CA — July 1, 2020 — Interest rates for new vehicles increased slightly in June, according to the car shopping experts at Edmunds. The annual percentage rate (APR) on new financed vehicles averaged 4.2% in June, compared to 4% in May and 4.3% in April. Despite this slight month-over-month increase, analysts note that this is still the second-lowest average interest rate that Edmunds has on record since September 2015.
Edmunds data also shows that 0% finance offers took a dip for the second month in a row in June but remained at near-record levels; these deals constituted 19.4% of all new financed purchases, compared to 24% last month.
"Although car shoppers still got to take advantage of favorable financing conditions in June, all signs point to automakers pulling back on the more generous incentives introduced at the outset of the pandemic," said Jessica Caldwell, Edmunds' executive director of insights. "As states across the country have reopened, consumers have resumed more of their regular purchasing habits, and as inventory levels decline, automakers understandably are less prone to spend big to spur demand."
Edmunds experts note the average down payment climbed to $4,451 in June, the highest seen all year, while the average loan term dipped below 70 months for the first time since February.
"It might not seem like a positive for car shoppers, but it's probably for the best that loan terms are returning a bit closer to Earth after skyrocketing for months," said Caldwell. "At 0% financing, a six- or seven-year loan could make sense for a responsible buyer, but for many Americans, relying on longer loan terms to justify their bigger vehicle purchases could put them at greater risk for negative equity in the future."More insight into recent auto industry trends can be found in the Edmunds Industry Center at https://www.edmunds.com/industry/insights.html.
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