SANTA MONICA, CA — October 3, 2023 — Unrelenting borrowing costs continue to make buying a new or used car a challenge for many consumers, according to the car shopping experts at Edmunds.

Q3 vehicle transaction data from Edmunds reveals:

• The average annual percentage rate (APR) for both new and used vehicles continued to climb in Q3: New-vehicle APR ticked up three percentage points since last quarter to 7.4%, while used-vehicle rates jumped two points to 11.2% since Q2.
• Both new and used APRs reached points not seen since the Great Recession: New-vehicle APR last hit 7.4% in Q2 2007 (7.5%), and used-vehicle APR is the highest since Q4 2007 when it climbed to 11.4%.
• The share of consumers who financed a new vehicle with a monthly payment of $1,000 or more increased to a new all-time high of 17.5% in Q3 2023 from its previous record of 17.1% last quarter.
• The average monthly payment on a new vehicle in Q3 reached an all-time peak of $736, up slightly from $733 in Q2. For used vehicles, average down payment also reached a record high in Q3, up to $4,111 from $4,107 in Q2 2023.
• The average amount financed across new and used vehicles ticked slightly lower in Q3, down $207 to $40,149 for new since Q2 and down $337 to $29,328 for used in the same timeframe.

"Spiked interest rates remain the biggest impediment to affordability in both the new and used car markets today. And while the Federal Reserve held off on raising the federal funds rate in their most recent session, the expectation is rates will remain high or even increase slightly through the end of the year, which may help tame inflation in the long run but is inflating monthly payments for now," said Jessica Caldwell, Edmunds' head of insights. "Looking ahead, the ongoing UAW strike could wipe out any inroads made on inventory and the return of incentives, further elevating pricing, at least among Detroit automakers."

Edmunds analysts took a closer look at the share of new-vehicle sales with 0% financing from 2019 through Q3 2023 and uncovered a notable decline in transactions involving these extremely subvented rates relative to early stages of the pandemic. According to Edmunds data, 0% financing reached a peak in Q2 2020 at 24.2% of all sales but dropped significantly to reflect just 1.1% of transactions in Q3 2023.

"Zero-percent financing commercials might still be airing to draw shopper attention, but the reality is those deals are all but gone for the average car shopper," said Ivan Drury, Edmunds' director of insights. "The largest segment of consumers financing a new car today has a 7.9% APR. That's a far cry from those spring 2020 pandemic deals of 0% financing for 84 months that drove significant sales of large trucks and SUVs."

Even if 0% financing deals aren't on the table, Edmunds analysts note that there are still some deals to be found across a variety of automakers depending on availability, competitiveness in the segment and region, among other factors. Consumers can check out the latest new-vehicle incentives and rebates on Edmunds here.

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