Edmunds: Down payments for financed used cars edge higher in Q4

Along with highlighting how many consumers are committing to a monthly payment of more than $1,000 to take delivery of a new vehicle, the newest auto finance data from Edmunds showed dealerships and finance companies coaxed a bit more of a down payment in connection with used-car transactions booked during the fourth quarter.

Edmunds reported on Friday that average down payments for used vehicles financed and delivered in Q4 came in at $4,219, which was $97 more year-over-year and $54 more than the previous quarter.

Without having to stretch terms beyond the average of 69.5 months, analysts also noticed the average monthly payment for used vehicles delivered in Q4 dipped to $533, which was $28 below the year-ago reading.

When it comes to new-car financing, the scene is dramatically different. Here are the highlights Edmunds’ newest data showed:

—New-car shoppers are taking on $1,000-plus monthly payments at record levels: The share of consumers taking on loans with new-vehicle monthly payments of $1,000 or more was 18.9% in Q4 2024, an all-time high, according to Edmunds’ records.

—New-car buyers are taking out bigger loans than ever before. The average amount financed for new-vehicle purchases in Q4 was $42,113 in Q4 2024 — an all-time high, according to Edmunds records — compared to $40,713 in Q3 2024 and $39,977 in Q3 2024.

—Finding (or qualifying for) 0% finance deals remains nearly impossible. Edmunds indicated 0% finance deals accounted for just 2.4% of all new financed vehicle purchases in Q4, compared to 3% in Q3 and 2.3% in Q4 of last year.

Edmunds analysts noted that even if buyers are able to find a 0% finance offer, they’d still have to qualify with excellent credit, which is a challenge for many consumers.

—Interest rates remain historically high, but there are encouraging signs of a downward trend. The average new-vehicle APR in Q4 dipped to 6.8%, compared to 7.1% in Q3 and 7.4% in Q4 of last year.

Edmunds data showed that consumers with contract terms of 67 months or greater saw a quarterly decline in average APRs, dropping to 7.8% in Q4 compared to 8.3% in Q3. (Between Q2 2023 and  Q3 2024, average APRs for contracts of longer than 67 months consistently stayed above 8%.)

Edmunds analysts pointed out that this decline is a positive sign for more price-sensitive buyers, who are likely stretching out their contract terms to reduce monthly payments.

“Although they tend to skew a bit higher at year end, the record highs in auto financing amounts that were set in Q4 are the culmination of major challenges to new-vehicle affordability that consumers faced in 2024,” Edmunds head of insights Jessica Caldwell said in a news release. “It’s getting more and more difficult for the average shopper to walk into a new-car dealership and leave with a set of keys without feeling like they are forced to create extra room in their budget from some other aspect of life.

“The one bright spot is that interest rates seem to finally be on a downward trajectory, so buyers are at least getting more car for their buck rather than allocating their payments to interest,” Caldwell added.

Edmunds analysts advised car shoppers seeking more affordable options in 2025 to consider changing up their buying habits.

“For longstanding new-car buyers coming back to the market for the first time in years, used purchases and new EV leases are your best bets to keep your monthly payment in line with what you were accustomed to in pre-pandemic times,” Edmunds’ director of insights Ivan Drury said.

“Going down either route presents traditional new-car shoppers with a couple of options: sticking with what you know — buying a used car similar to your current one but with some upgraded features — or embracing the future with an electric vehicle,” Drury went on to say.

Quarterly New-Car Finance Data (Averages)

Quarterly Used-Car Finance Data (Averages)

Source: Edmunds