Home >> Money & The Economy >> Auto Loan Interest Rates Hit Nine-Year High in June

Auto Loan Interest Rates Hit Nine-Year High in June

Rates rise 17 percent since January as automakers curtail zero percent financing offers

 Auto loan interest rates are expected to climb to their highest level since 2009 for the second month in a row in June, according to the car shopping experts at Edmunds. The annual percentage rate (APR) on new financed vehicles averaged 5.82 percent in June, compared to 4.96 percent in June 2017 and 4.10 percent in June 2013. Edmunds analysts point to the most recent Fed rate hike as a contributing factor toward this increase, and note that June marks a 17 percent total increase since January 2018, when APRs averaged just below 5 percent.

“Auto loan interest rates have been steadily on the rise this year and we don’t see them going down anytime soon, which could mean trouble for automaker sales through the end of the year,” said Jeremy Acevedo, Edmunds’ manager of industry analysis. “While some shoppers may take this as a cue to purchase new vehicles now while rates are still somewhat favorable, we’re getting dangerously close to a tipping point. Shoppers with average or subprime credit may end up putting off purchases as financing vehicles get increasingly more expensive.”

Edmunds experts note that zero percent financing loans reached their lowest level in nine years in June, constituting just 5.6 percent of total finance deals, compared to 9.47 percent in June 2017 and 10.55 percent in June 2013.

(Article Continues Below Advertisement)

“June typically boasts a substantial amount of zero percent financing deals, so this is a big red flag,” said Acevedo. “This might be a sign that access to cheap and easy credit — a postrecession hallmark that we’ve all grown so accustomed to — could be officially over. But there’s hope yet — the true indicator will be whether zero percent deals materialize through the rest of the summer selling season, which automakers typically rely on to clear outgoing model-year inventory.”

More insight into recent auto industry trends can be found in the Edmunds Industry Center at http://www.edmunds.com/industry-center/.

New-Car Finance Data

June 2018

(Article Continues Below Advertisement)

June 2017

June 2013

Term

68.85

69.34

65.59

Monthly Payment

$533

$517

$465

Amount Financed

$30,896

$30,945

$26,940

APR

5.82

4.96

4.10

Down Payment

$3,995

$3,687

$3,402

 

Used-Car Finance Data

June 2018

June 2017

June 2013

Term

66.94

66.91

64.33

Monthly Payment

$398

$383

$367

Amount Financed

$21,610

$21,142

$19,461

APR

8.21

7.64

7.87

Down Payment

$2,612

$2,453

$2,165

Wake up Right! Subscribe to our Morning Briefing and get the news delivered to your inbox before breakfast!

About Carl Fox

Carl Fox is the money and finance editor for Conservative Daily News. Follow him in the "Money & The Economy" section at CDN and see his posts on the "Junior Economists" Facebook page.
Sign up for our Newsletter

* indicates required field




Email Format


Subscribe!