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New Vehicles Get Slightly More Affordable in Third Quarter

by | December 6, 2023

Consumers have been concerned about the affordability of vehicles for some time now. Rising prices for new vehicles combined with a constant stream of interest rate hikes have made buying a new vehicle a more expensive proposition until recently.

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It appears that new and used vehicles are becoming more affordable as new and used vehicle loan amounts dropped in the third quarter.

New vehicle prices have been going down for a while, but also noticeable is the fact that the average new vehicle loan amount in the third quarter fell to $40,184 from $41,543 for the year-ago period.

The average used vehicle loan amount went from $28,684 to $27,167 year-over-year, according to Experian’s State of the Automotive Finance Market Report: Q3 2023. It suggests the market is stabilizing, reversing a trend from Q3 2021 to Q3 2022 when loan amounts jumped $3,698 for new vehicles and $2,379 for used vehicles.

Other factors

Despite the lower amount borrowed, the average monthly payment for the quarter rose slightly to $726 from $701 last year at this time. Used vehicle payments rose as well, although it was a mere $4 a month to $533.

Additionally, the average interest rate for a new vehicle went from 5.26% in Q3 2022 to 7.03% in Q3 2023, and the average rate for a used vehicle increased from 9.38% to 11.35% in the same time frame.

Despite taking out smaller loans, monthly payments rose $25 a month during the third quarter.

Change in strategy

For a long time, consumers were shopping for a monthly payment, so extending the loan term was popular. In fact, 84-month loans were the fastest-growing segment of the finance market. Not anymore.

In Q3 2023, new vehicles with up to 48-month loan terms increased to 13.40% from 9.99% in Q3 2022. Additionally, new vehicle loans with 49- to 60-month terms went from 16.50% to 17.16% year-over-year, and new vehicle loans with 61- to 72-month terms reached 38.65% this quarter, from 36.67% last year. On the contrary, new vehicle loans with 73- to 84-month terms decreased from 35.11% in Q3 2022 to 29.15% this quarter.

It’s notable that loans up to 48 months offered an average interest rate of 4.03% in Q3 2023, while the average rate for 49- to 60-months was 5.67%, followed by 61- to 72-months at 7.24%, 73- to 84-months at 8.80%, and 85+ months at 8.81%.


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