New-Auto Interest Rates Drop

By Staff Writer June 05, 2020

Interest rates for new vehicles in May dropped to the lowest level seen by the industry in nearly seven years, according to the car shopping experts at Edmunds. The annual percentage rate (APR) on new financed vehicles averaged 4 percent in May, compared to 4.3 percent in April and 6.1 percent a year ago. This is the lowest average interest rate since August 2013, and the third lowest Edmunds has on record dating back to 2002.

Edmunds analysts note that 0 percent finance offers dipped slightly in May compared to April, but still remained at near-record levels; these deals constituted 24 percent of all new financed purchases, compared to 25.8 percent last month. Edmunds data also reveals that 47 percent of all financed purchases received an APR below 3 percent in May, compared to 41.5 percent in April.

“Consumers who purchased a car in May got to take advantage of some of the best deals we’ve ever seen, thanks to a combination of Memorial Day weekend sales and generous incentives offered by automakers to spur demand during the pandemic,” said Jessica Caldwell, Edmunds’ executive director of insights. “Even with 0 percent finance deals down slightly, more car shoppers got better financing rates than usual.”  

Edmunds experts note that loan term lengths sustained near-record highs in May. The average loan term length for a new vehicle was 71.4 months, which is the second highest Edmunds has on record, compared to last month’s average of 73.4 months.

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Last modified on Monday, 08 June 2020 14:50