Edmunds: Average amount financed for used cars drops in Q3

While new-car financing and delivery still might have remained out of reach for some consumers, the newest used-car financing data from Edmunds released on Tuesday showed some changes in average down payments and the amount financed.

Edmunds reported that the average amount financed for a used vehicle delivered in Q3 came in at $28,097, which was $1,568 lower than the previous quarter.

And analysts said the average down payment for used cars financed during the third quarter was $4,165, which was $59 higher on a sequential basis.

What captured Edmunds’ attention most when examining its newest finance data was what’s continuing to unfold in the new-car market.

Here are the four main findings analysts shared on Tuesday:

—Interest rates are sitting at near-record highs: The average new-vehicle APR in Q3 remained elevated at 7.1%, which was the same as in Q2. This marks the sixth consecutive quarter that new-vehicle APRs have been above 7%.

—0% finance deals remain nearly impossible to find (or qualify for): Edmunds determined 0% finance deals accounted for just 3% of all new financed vehicle purchases in Q3, which was the same as in Q1 and Q2. Edmunds analysts note that even if buyers were able to find a 0% finance offer, they’d still have to qualify with excellent credit, which is a challenge for many consumers.

—Consumers continue to sign up for longer terms in order to stomach higher prices: Edmunds said 69% of new-vehicle financing had terms longer than 60 months in Q3, similar to a share of 70% in Q2 and 69% in Q1. Edmunds analysts noted that 84-month terms are on the rise, accounting for 18.1% of new-vehicle financing in Q3, compared to 17.3% in Q2 and 15.8% in Q1.

—New-vehicle shoppers are taking on monthly payments of $1,000 or more at near-record levels: The share of consumers taking on contracts with new-vehicle monthly payments of $1,000 or more was 17.4% in Q3 2024, marking the sixth consecutive quarter that the share of $1,000-plus monthly payments was above 17%.

—A majority of car shoppers are holding off on purchasing their next vehicle because of high interest rates: Edmunds conducted a survey in August among car shoppers who have purchased a vehicle previously and have indicated they are planning on purchasing a vehicle in the next 12 months. And 62% of the respondents said that they have held off on buying a new vehicle because of high interest rates.

“Q3 was unfortunately the same old story as the first half of 2024 in terms of auto financing conditions: Car shoppers found little relief from the elevated interest rates and high prices, which in turn hindered new-vehicle sales growth,” Edmunds head of insights Jessica Caldwell said in a news release. “The Fed’s decision to cut rates was a welcome update at the end of the quarter but, on its own, is unlikely to dramatically change the financial landscape for car buyers.”

Edmunds experts point to the uptick in 84-month contracts as a potentially troubling sign for consumers down the road.

“Longer loan terms might make monthly payments more palatable for consumers, but the harsh reality is that most Americans don’t want to keep their vehicle for seven years,” Edmunds’ director of insights Ivan Drury said in the news release. “Simply put, longer loan terms put car owners at greater risk of rolling negative equity into their next auto loan.”

Quarterly New-Car Finance Data (Averages)

Quarterly Used-Car Finance Data (Averages)

Source: Edmunds