July 21, 2024

Average monthly car loan payment hits a record $739 in Q4 2023


The financial aspects of getting into a new vehicle are getting better thanks to growing dealer inventories, more incentives, and better interest rates. Even so, unwelcome records are still being set. Edmunds looked at loan figures for 2023, the headline conclusion being “lower interest rates secured on more manageable term lengths for new vehicles in Q4.” The flip side is record amounts for down payments and monthly payments. According to Edmunds‘ figures, buyers put an average of $7,074 down on a new vehicle in Q4 2023, surpassing the mark of $6,907 from Q3 2023 and $6,780 from Q4 2022.

That up-front benchmark didn’t prevent setting a record for the average monthly payment for a new vehicle reaching $739 in Q4, $3 more than the previous record set in Q3, $22 more than Q4 2022. Higher up the pay scale, the share of buyers paying more than $1,000 per month hit 17.9% in Q4, up 0.4% over Q3 2023 and up 1.4% compared to Q4 2022. Edmunds said an influx of luxury buyers in Q4 nudged the percentage, so this stat might not be as dispiriting as it appears.

Used car buyers are still getting worked on the ropes. Down payments for secondhand goods also set a record, although Edmunds didn’t provide a figure. The average interest rate for used cars was 11.6% in Q4, 0.4% over Q3 and 1.6% over the year prior.

The good news is an increasing number of loans given at 0% APR. Out of all new vehicle sales in Q4, 2.3% were financed with 0% loans, a whopping 1.2% gain on Q3. Loans were given for longer terms on average compared to Q3, a duration of 54.3 months versus 44.8 months. The 54.3-month mark is getting close to the record set in 2021 of 56.8 months.  

Better times could convince a shopper to wait a little longer to buy a car while monitoring how much the situation might improve for the car or loan they want. However, models are still going up in price around this time of year — some shockingly so — which needs to be factored into an equation for genuine savings. Edmunds‘ Ivan Drury advised, “While shorter term loan deals are still most common with low APR financing, it is encouraging to see more reasonable term lengths becoming more prevalent with APRs below 4%. Finding these deals still requires a bit of work, however. If you’ve declared any New Year’s resolutions involving less screen time, you might need to make an exception for online car shopping, especially if other resolutions include tightening your spending.”

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