Auto Loan Interest Rates Hit 10-Year High
Edmunds says the average APR for a U.S. new-vehicle loan was 6.36% in March, putting dealers and consumers on the cusp of a ‘dramatic shift’ toward the used-car market.

Only about 4% of all new-vehicle loans carried a zero percent interest rate in March, a sharp decline from 7.44% in the same month a year ago and 7.59% in March 2014.
Photo by RawPixel via Pixabay
SANTA MONICA, Calif. — Car shoppers looking to get a break from rising interest rates didn’t find it in March, as the average interest rate on a new-vehicle loan hit its highest level in a decade. According to the latest report from Edmunds, the annual percentage rate on new financed vehicles is expected to average 6.36% in March, compared to 5.66% last year and 4.44% five years ago.
Analysts noted that buyers were able to find more zero percent finance offers in March compared to the first two months of the year, but these deals are much harder to come by than they have been historically. About 4% of all financed deals in March had zero percent interest rates, compared to 7.44% last year and 7.59% in 2014.
“Things just keep getting tougher for new-car shoppers,” said Jessica Caldwell, executive director of industry analysis. “Interest rates have crept up every month so far this year, and new-vehicle prices continue to hover near record highs. We’re on the cusp of what could be a pretty dramatic shift in the market, simply because a big chunk of buyers are getting priced out.”
Edmunds experts note that, in the first quarter of this year, an increasing number of car buyers are being pushed into higher financing brackets. Edmunds data reveals that shoppers receiving interest rates of 10% or higher constituted 14.1% of the market in March, the highest level seen since February 2008.
“It’s pretty alarming to see that a sizable segment of new-car shoppers are financing cars at rates that we’d normally associate with used vehicle purchases,” said Caldwell. “The good news is that the Fed has halted rate hikes for now and we’re edging closer to the summer selldown season, when the number of incentive offers starts heating up. But without automakers stepping in to offer a reprieve, interest rates around 6% are likely the new normal.”
Originally posted on F&I and Showroom
More Industry

World EV Adoption Set to Grow
A new report says the segment, despite recent setbacks in some regions, is poised for acceleration as many countries look to reduce pollution.
Read More →
Black Book: Weekly Market Update
Wholesale automotive auction business stayed steady last week as bidders encountered lower prices, analysts observed.
Read More →
Pricing Transparency Drives Purchase Consideration
An annual study by JD Power found that clear pricing matters to consumers on automaker websites, so much so that it increases their purchase consideration.
Read More →
Black Book: Weekly Market Update
Used-vehicle market depreciation was the prevailing story in the wholesale market last week.
Read More →
Smaller Is Looking Better
A growing number of Americans in the market for a new vehicle are opting for more affordable options, not waiting for market stability to bite the bullet.
Read More →
U.S. EV Market Slowly Stabilizes
U.S. electric-vehicle interest is slowly stabilizing since a major dip in sales after last year's end of the federal EV tax credit, and hybrids remain the leading electrified power train.
Read More →
Global EV Market Entering New Phase
Automakers are making investments to lower battery costs and optimize production to meet changing consumer needs.
Read More →
Black Book Weekly Market Update
The holiday weekend, not surprisingly, put a drag on wholesale automotive activity last week, analysts observed.
Read More →
Auto Affordability in Context
Cox Automotive points out the complex circumstances that have led to eye-popping vehicle prices.
Read More →
Black Book: Weekly Market Update
Automotive auction inventory increased last week, giving choosy bidders even more leeway.
Read More →