New Car Loan Rates Drop

December 05, 2019

The average interest rate for a new vehicle loan dropped to its lowest level of 2019 - and lowest level seen since February 2018 - in November, according to the car shopping experts at Edmunds. The annual percentage rate (APR) on new financed vehicles averaged 5.5 percent in November, compared to 5.7 percent in October and 6 percent in November, 2018. Edmunds data reveals that 21.8 percent of shoppers who financed their vehicle purchases in November got an interest rate below 3 percent, compared to 18.6 percent of those who financed purchases in November 2018.

While interest rates declined, Edmunds experts note that new vehicle prices continued to rise in November. Edmunds data reveals that the average transaction price for a new vehicle climbed to an all-time high of $37,981 in November, compared to $37,188 last year and $33,282 five years ago.

Wantalease.com, an online marketplace for new lease deals, reports the latest update on new lease offerings for the month of November, and forecasts new leasing trends for the month of December.  Several manufacturers offered attractive discounts and competitive pricing on compact cars and SUVs, while most luxury and full-size vehicle brands maintained their lease prices.

The Nissan Sentra is currently priced the lowest of all vehicles, with payments as low as $139 per month.  The Ford Focus comes in second place with new lease payments of $159 per month, followed by the Honda Civic at $169 per month.

While most vehicle prices have remained steady into the month of December, some dealers have offered lower lease pricing on vehicles of all sizes, mostly in anticipation of December and holiday specials.

The vehicle that saw the largest price drop coming into the month of December is the Nissan Frontier with a 8.59 percent decrease.  The vehicle is offered at $271 per month, followed by the Volkswagen Jetta at $229 (-7.93 percent), the Lexus RX 350 for $419 per month (-6.16 percent), and the Toyota RAV4 at $279 per month (-5.64 percent).

The vehicles with the largest increased monthly payments are the Nissan Titan with a 36.87 percent increase, and the Nissan Altima with a 20.23 percent increase in price from October.  The Nissan Titan is currently offered at $315 per month, while the Nissan Altima is offered for $229.

The latest Capital One Auto Navigator survey reveals only 26 percent of respondents feel very confident when shopping for a car. While this is a 6 percent increase over 2018, respondents attribute low confidence to not having finances in order prior to visiting a dealership (27 percent), not researching nor knowing what car they want (43 percent) and past experience (28 percent).

Fifty-seven percent of respondents are looking for improvements to the car buying process, particularly transparency in financing options, negotiations and more clarity on dealer incentives and promotions.

The most time-consuming task at the dealership is working with and signing paperwork with the finance department, according to 52 percent of respondents.

Dealertrack F&I announced an expanded integration with CDK Global, Inc. that brings together CDK Drive DMS and Dealertrack uniFI platform to enable faster funding for more dealers. Through the integration, dealers leveraging both systems can now seamlessly import their lease deals right from CDK Drive into Digital Contracting on Dealertrack uniFI platform, helping reduce manual data entry, contract errors and the frustrations of re-contracting. Lenders can gain the advantage of faster funding to the extensive CDK customer base.

The integration will assist dealers and lenders in addressing a pain point in the car buying process – filling out paperwork and contracts. According to the 2019 Cox Automotive Car Buyer Journey Study, less than half of consumers (42 percent) were satisfied with how long the process took at the dealership. Additionally, 47 percent of that time is spent negotiating and filling out paperwork.

The auto loan default rate was down two basis points to 1.03 percent through October, according to data released by S&P Dow Jones Indices and Experian or the S&P/Experian Consumer Credit Default Indices.

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