DETROIT -- In a possible sign that auto lenders are loosening their purse strings, a record-breaking 22 percent of financed new cars in the United States were purchased with 0 percent interest in March, according to an Edmunds.com report released today.
Last month's number, which nearly doubled the 13 percent posted in March 2009, beat the previous record of 21 percent set in July 2006.
“Credit must be starting to loosen if almost a quarter of all transactions financed in March were approved for 0 percent financing,” Jessica Caldwell, a senior analyst for Edmunds.com, said in a release.
“Certainly it seems as if Toyota Motor Credit and other ‘captive' finance companies may have lowered standards to help improve sales.”
Edmunds said 71 percent of new Toyotas financed in March had 0 percent APR, eclipsing the previous Toyota Motor Corp. record of 39 percent last August.
The Mazda and Mercury brands had the next highest percentages with 58 percent and 32 percent, respectively, according to Edmunds.
Dealers welcome the lower interest rates.
Bob Rohrman, owner of the 30-store Bob Rohrman Automotive Group in Lafayette, Ind., recently told Automotive News that he had one bank cut its auto loan rate to 3.5 percent from 6 percent.
“Banks are starting to have a greater appetite for risk,” Rohrman said.
Incentives also have helped drive down the industry average interest rate on a retail car loan, which sank to an eight-year low of 4.4 percent in March, Edmunds.com reported earlier.
The industrywide average dropped sharply from February's 5.3 percent and is 2 percentage points lower than two years ago.