Edmunds: While used-financing trends remain stable, 2 records set involving new cars in Q1

If it took some extra finagling to get your contracts bought during the first quarter — especially in connection with new vehicles — the latest financing data from Edmunds might support the reasons why.

While the metrics for used-car financing remained relatively stable in Q1, Edmunds spotted volatility on the new-car side, with 84-month contracts making up a record 19.8% of new-vehicle financing during the first three months of the year.

That level is up from 15.8% in Q1 2024 and 13.4% in Q1 2019.

“The auto finance market showed signs of steadiness in Q1, but that stability doesn’t mean affordability has improved,” Edmunds head of insights Jessica Caldwell said in a news release. “When one in five new-car buyers are taking on seven-year loans, it’s clear how many consumers are still financially stretched.

“Even with rates holding relatively flat, the continued reliance on extended terms and high monthly payments reveals how challenging car buying remains,” Caldwell continued. “And now, with auto tariffs officially taking effect, there’s a risk that they will add fuel to the fire — triggering a disruption that could push vehicles even further out of reach for many shoppers.”

If a new vehicle is out of reach, no doubt it will push potential buyers to used vehicles, which are already moving higher in price on the wholesale market.

Edmunds noticed that average down payments and subsequent monthly payments after delivery moved in opposite directions for used vehicles financed during the first quarter. Analysts determined down payments softened by $141 year-over-year while monthly payments ticked up by $17 on the same comparison.

But the average total amount financed for a used car dropped by $337 year-over-year to $28,338.

That average amount financed might be half of what some new-car deliveries entail nowadays.

Edmunds reported the average amount financed for new-vehicle purchases in Q1 was $41,473 compared to $42,113 in Q4 2024 and $40,427 in Q1 2024.

And analysts pointed out 0% financing deals have all but evaporated.

Analysts indicated 0% financing deals accounted for 1.0% of new-vehicle loans — the lowest share Edmunds has on record. By comparison, they made up 1.1% of contracts in Q3 2023 and 3.0% in Q1 2024.

“Once a common incentive used to entice buyers, these deals have steadily declined in today’s high-rate environment, signaling a clear end to the era of ‘free money’ financing,” Edmunds said.

One other note from the newest Edmunds data. The share of new-car buyers committing to monthly payments of $1,000 or more held steady at historically elevated levels in Q1, landing at 17.7%.

As affordability pressures persist in the auto market, Edmunds analysts noted that new policy proposals — such as President Trump’s suggestion to allow consumers to deduct interest paid on loans for American-made vehicles — could serve as powerful incentives for car buyers.

Edmunds data shows that the average interest paid for a financed new vehicle averaged $9,231 in Q1 2025.

“In theory, a tax break like this could provide real relief to consumers, especially with total interest paid on a new-vehicle loan amounting to what could otherwise be used toward a home renovation project or vacation,” Caldwell said. “But there are still a lot of unanswered questions — from how ‘American-made’ would be defined to how this would be implemented and who would qualify.

“Until those details are clarified, it’s hard to gauge how much effect a policy like this could have on the market,” she added.

Quarterly New-Car Finance Data (Averages)

Quarterly Used-Car Finance Data (Averages)

Source: Edmunds