Auto Finance Market Has Steady February as Tariffs Loom
Edmunds analysts say the U.S. auto finance market demonstrated stability in the face of uncertainty in February, reporting modest increases in loan cost, amounts financed, payments and terms.
The average annual percentage rate (APR) for new vehicle loans ticked up to 7.2% from 7.1% in February 2023. The average amount financed was $41,585 (up 2.7%) with an average monthly payment of $743 (up 1.1%). U.S. new vehicle buyers will pay an average of $9,382 in interest (up 6.5%) over an average term of 69.6 months, up from 68.3 months a year ago.
Yesterday, President Donald Trump granted a 30-day pause on new tariffs of 25% for vehicles built by U.S. manufacturers and imported from Canada and Mexico, giving the factories time to strategize toward increased domestic production.
In a memo sent to media members, Edmunds’s head of insights, Jessica Caldwell, expressed doubt that the “looming threat” tariffs present can be resolved that quickly.
“Being stuck in this limbo presents challenges for the industry and could have ripple effects on consumer confidence. Affordability is already a major concern for American car shoppers amid elevated prices and interest rates, and continued uncertainty only adds to the pressure,” she wrote. “President Trump mentioned that the auto industry will ‘boom’ in his remarks to Congress last night, but how that vision aligns with the proposed tariffs in their current state remains unclear.”
