Borrowers landed more favorable terms on auto loans in the fourth quarter, though monthly and down payments hit records, Edmunds data show.

The shift reflects increased incentives as the market rebalances toward the buyer, the online automotive data provider said.

The year-ending quarter brought lower annual percentage rates for longer terms and more new-vehicle loans with zero-percent financing.

But new-vehicle monthly and down payments; average APR and down payments for used vehicles; and the number of new-vehicle buyers with monthly payments exceeding $1,000 all reached record highs.

“… there are some very encouraging signs as we kick off 2024 when considering the makeup of deals in the latter half of Q4 2023,” said Edmunds Head of Insights Jessica Caldwell.

“Incentives are slowly coming back as inventory improves. Most consumers are looking for low APRs with longer loan terms, so the growth in those loans is helpful to lure consumers who have been sitting out due to adverse financing and pricing conditions."

• APRs lowered for longer-term loans as 2023 progressed, falling below 4%, Edmunds found.

• The share of zero-percent financing on new vehicles rose quarter-over-quarter from 1% to over 2%.

• Meanwhile, new-vehicle monthly payments also rose, though by only $3 to $739, essentially flat. Down payments exceeded $7,000 for the first time at $7,074, up from $6,907 in the third quarter.

• New-vehicle borrowers with monthly payments of at least $1,000 rose quarter-over-quarter from 17.5% to 17.9%.

• Average used-vehicle APRs rose from 11.2% to 11.6%.

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