A traditional measuring stick for subprime auto financing has been that consumers in this segment typically top out at a $400 monthly payment.

The newest data from Edmunds perhaps showed how unlikely it is those subprime customers can swing the monthly payment for a new vehicle.

New-vehicle transaction data from Edmunds released on Monday showed that record-breaking financing figures generated during the first quarter intensified in Q2. Analysts highlighted:

—The share of consumers who financed a vehicle with a monthly payment of $1,000 or more reached a new all-time peak of 17.1% in Q2, up from 16.8% in Q1 2023 and 4.3% in Q2 of 2019.

—Average monthly payments also reached a new record high of $733 in Q2, up from $730 in Q1 and $678 in Q2 2022.

—The average annual percentage rate (APR) ticked up a tenth of a percentage point to 7.1% in Q2, compared to 7.0% in Q1 and 5.0% in Q2 2022. Edmunds pointed out the 7.1% is the highest APR since Q4 2007.

—The average amount financed remained above $40,000 for the fifth straight quarter, settling at $40,356 in Q2, slightly below Q1 2023’s mark of $40,468 and $40,602 in Q2 2022.

“The double whammy of relentlessly high vehicle pricing and daunting borrowing costs is presenting significant challenges for shoppers in today’s car market,” Edmunds director of insights Ivan Drury said in a news release. “The Federal Reserve’s recent pause in interest rate hikes unfortunately didn’t offer much relief for consumers, and hints at further raises later this year mean auto loan rates could even continue to increase.”

Edmunds analysts conducted a deeper dive into the makeup of those $1,000 new-vehicle monthly payments and discovered that not all four-figure monthly payments look the same.

Of the consumers who agreed to a $1,000 monthly payment in Q2, Edmunds found there are two distinct subgroups:

—64.5% signed up for an average term range of between 67 and 84 months and an average APR of between 8.5% and 9.6%. Edmunds analysts said this group is made up of consumers who are paying thousands of dollars toward interest versus principle and could find themselves upside down on their installment contracts down the road.

—15.6% booked term lengths between 31 and 48 months and a 2% to 4.8% APR. Edmunds analysts noted this latter group is likely made up of “savvy” consumers who are taking advantage of subsidized finance offers, which typically consist of lower-rate but shorter-term loans.

On a typical $40,000 installment contract, consumers with a 2.9% APR over 36 months can expect to save $8,500 in finance charges compared to those with a 7.9% APR over 72 months.

“There are better ways and worse ways to spend $1,000 per month on a car note,” Drury said. “Consumers who are paying large amounts of finance charges could be in jeopardy of falling into a negative equity trap, so it’s critical to come to the table with a comprehensive budget and a feel for the financing elements of a car purchase beyond the monthly payment, including the APR.

“For those with plans to replace their vehicle over the next few months, you may have to reset any expectations of the summer discounts of old. But, on a positive note, trade-in values remain elevated compared to prepandemic times, so shop around to ensure you get top dollar for the asset you own,” Drury went on to say.