August data shows providers held the line on term, down payment, amount financed

The latest data from Edmunds confirmed that finance companies are trying to hold firm on term, down payment and total amount financed in an effort to remain within their underwriting parameters and mitigate risk.

Edmunds’ August data did show some marginal rises in term and total amount financed year-over-year for used-vehicle and new-vehicle financing, but the average down payment did not soften tremendously.

However, analysts acknowledged the average down payment for a new vehicle dropped below $4,000 for the first time in more than a year.

Analysts determined the average interest rate for a new-vehicle retail installment contract originated in August stayed below 6% for the second month in a row. The annual percentage rate (APR) on new financed vehicles averaged 5.8% in August, compared to 5.8% in July and 6% in June.

Edmunds data revealed that the share of sales with zero percent finance deals saw a slight lift in August, constituting 6.1% of financed purchases in August compared to 5.8% in July.

“Shoppers who made it to the dealership this Labor Day weekend got to take advantage of slightly more generous offers than we’ve been seeing all year, but this shouldn’t be taken as a sign of a dramatic turnaround in the market,” Edmunds executive director of industry analysis Jessica Caldwell said in a news release.

“The model-year sell-down is still in full swing, and automakers and dealers are moving things along just like they should at this time of year,” Caldwell continued.

The summer sell-down season also coincides with hurricane season, and Edmunds analysts are keeping a close eye on how Hurricane Dorian may impact automakers. After leaving catastrophic damage in the Bahamas, the storm has been projected to scrap the coasts of Florida, Georgia and the Carolinas.

“Hurricane Dorian might have delayed some new vehicle purchases, but its overall impact on August sales appears to be fairly nominal,” Caldwell said. “We’ll be keeping a close eye to see how it may impact numbers in September as its track inches closer to the U.S. mainland.”

New-Car Finance Data

Used-Car Finance Data

Source: Edmunds