As monthly payments, loan terms and amount financed increases for new and used vehicles purchased during the coronavirus pandemic, one influential metric continues to drop — the average interest rate.
Rather than a positive omen for affordability in the new-vehicle market, experts at Cox Automotive believe the drop indicates an increasing exclusivity in obtaining vehicle financing.
The number of customers buying new vehicles with high-interest-rate financing dropped, Charlie Chesbrough, Cox Automotive senior economist, said last week in a virtual media presentation. These buyers likely were priced out of the market, he said.
"We've probably seen a huge exodus of customers from the new-vehicle market — the people that would pay the higher interest rate, the hourly workers," Chesbrough said.
The trend reflects what credit bureaus Experian and TransUnion reported throughout the pandemic — that auto customers in the lower credit tiers are disappearing from the new-car market.