Although the Fed recently cut interest rates, car buyers in Q3 of the 2024 calendar year faced long loan terms and “unrelenting” auto financing conditions. These trends look to continue for the foreseeable future, with some experts pointing to an increase in 84-month auto loans as one potential indicator that some consumers may be biting off more than they can chew.
According to a recent report from Edmunds, auto loan interest rates averaged at 7.1 percent during the third quarter of the 2024 calendar year, more or less matching interest rates for the preceding quarter and marking six straight quarters of new-vehicle APRs above 7 percent.
Meanwhile, 69 percent of new-vehicle loans had a term length over 60 months, similar to figures of 70 percent and 69 percent for the two preceding quarters. In addition, 84-month loan terms increased from 17.3 of car loans percent to 18.1 percent between Q2 of 2024 to Q3 of 2024. The average APR for the quarter was recorded at 7.1 percent, with a monthly payment of $736. New-vehicle buyers are also taking on monthly payments over $1,000 at record new levels, recorded at 17.4 percent for the quarter.
Meanwhile, used car financing data for Q3 of 2024 doesn’t look much better, with an average loan term of 69.5 months and an average monthly payment of $548. The average APR for a used car loan was 11.3 percent, while the average down payment is $4,165. These figures are similar to those from the preceding quarter, with a 70.2 average loan term, $569 monthly payment, 11.0 APR, and $4,106 down payment recorded for Q2 of 2024.
“Q3 was unfortunately the same old story as the first half of 2024 in terms of auto financing conditions: car shoppers found little relief from the elevated interest rates and high prices, which in turn hindered new-vehicle sales growth,” said Edmunds‘ head of insights, Jessica Caldwell. “The Fed’s decision to cut rates was a welcome update at the end of the quarter but, on its own, is unlikely to dramatically change the financial landscape for car buyers.”
Horsepower and grip take the win.
Amid a legal battle with a GM supplier.
Generally following the market trend.
View Comments
Unless you absolutely must, it's still an awful time to buy a new vehicle. Automakers don't get that buyers buying now are just kicking the can down the road because they will be good and stuck with their overpriced purchases for a LONG time. The fact that trade-in values are falling only hurts this situation even more.
The people buying at 7+% for 84 months will be upside down for the entire life of the loan. That means they can’t get what they owe if they want to trade it in unless they had a big down payment, but people with a big down payment don’t finance for 84 months. And they will be in real trouble if they have a wreck and the vehicle is totaled before it’s paid off. They will be making payments after it goes to the junk yard because the insurance value they receive won’t be enough to cover the payoff. I hear you can buy special insurance to cover the payoff gap. These people have no business buying a new vehicle.