Affordability Issues Persist in Q3 as Down Payments Hit 4-Year Low
Edmunds’s Q3 auto finance report shows the average down payment for a new vehicle purchased in the U.S. fell to $6,020, the lowest level since Q4 2021, and $1,000-plus monthly payments remain common, as do extended terms and high interest rates.
“In Q3, affordability in the new-car market remained stretched, with buyers putting less money down, financing more and relying on longer terms to keep monthly costs in check,” Head of Insights Jessica Caldwell writes, in part, in a release. “But compared to the near-new market, where inventory has been constrained by lean pandemic-era sales and reduced leasing activity, new vehicles seem to have emerged as the more compelling option.”
New-car buyers financed an average amount of $42,647 in Q3, up 0.6% from the prior quarter and 4.5% from a year ago. The average down payment in the year-ago quarter was a 9% higher at $6,433. Monthly payments of at least $1,000 accounted for 19.1% of transactions in Q3, ticking down from an all-time record 19.3% share in Q2.
Terms of 84 months or more represented 22% of new-car deals, down slightly from the prior quarter and appreciably from an 18.5% share in Q3 2024. The average interest rate held at 7% on “limited” promotional financing.
“With the potential for lower APRs and tariff-related price increases yet to materialize in any meaningful way, shopping for a new vehicle may have felt like the smarter play in Q3 — and could have given the new car market a modest boost,” Caldwell notes.
