Record Interest Rates Push Auto Industry to a Tipping Point in October, According to Edmunds Analysis
As average transaction prices continue to rise and financing deals evaporate, Edmunds experts say consumers could be spending thousands more to finance new vehicles

SANTA MONICA, CA — November 01, 2018 — Tightening credit conditions continued to squeeze consumer wallets in October, according to the car shopping experts at Edmunds. The annual percentage rate (APR) on new financed vehicles averaged 6.2 percent in October, a 1.3 percent increase from a year ago, a 2 percent increase from five years ago, and the highest level on record since January 2009. Edmunds analysts note that these higher interest rates contributed to the scarcity of zero percent finance loans, which fell to their lowest level since 2007. The percentage of sales with zero percent finance deals to dropped to 3.8 percent in October, compared to 7.5 percent in 2017 and 7.8 percent five years ago.

"We haven't seen interest rates hit the 6 percent mark in nearly 10 years, and zero percent finance loans have been cut down by nearly a third of where they were in 2016," said Jeremy Acevedo, Edmunds' manager of industry analysis. "It's getting harder and harder for shoppers to afford a new car, and if the economy starts to slip, we're at a point now where we really could start to see some significant impacts in the auto market."

High interest rates have been the driving factor eating into car shoppers' wallets. The average new-car buyer will pay $1,316 more in interest over the life of the loan if the individual bought a car this past October compared to October of 2017 (taking into consideration average loan term lengths, average amount financed, and average APRs). Shoppers with lower-than-average credit scores could pay even more.

"Access to cheap credit has been a key factor in the industry's post-recession sales rally and transition toward pricier trucks and SUVs. Now that we're entering a time when transaction prices are also booming, these rising rates compromise affordability and will likely begin to dampen demand moving forward," said Acevedo. "Even with upcoming holiday sales piling extra cash on the hood, shoppers planning on financing might be finding themselves priced out of vehicles they thought they could previously afford."

More insight into recent auto industry trends can be found in the Edmunds Industry Center at

New-Car Finance Data
  October 2018 October 2017 October 2013
Term 69.12 69.19 65.66
Monthly Payment $542 $516 $477
Amount Financed $31,200 $30,866 $27,605
APR 6.21 4.95 4.19
Down Payment $4,063 $3,966 $3,652


Used-Car Finance Data
  October 2018 October 2017 October 2013
Term 67.00 66.81 64.52
Monthly Payment $405 $386 $368
Amount Financed $21,735 $21,318 $19,580
APR 8.73 7.63 7.87
Down Payment $2,615 $2,529 $2,171


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 and Great Place to Work, Edmunds is based in Santa Monica, California, and has a satellite office in Detroit, Michigan. Follow us on Twitter, Facebook and Instagram.

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