F&I data: New-vehicle interest rates down in August, J.D. Power estimates

The Federal Reserve hasn't cut its benchmark rate this year — though it's likely to in September — but consumers received a slightly lower interest rate on new-vehicle loans in August anyway, according to preliminary projections released Aug. 29 by J.D. Power.

The average new-vehicle shopper who took out an auto loan in August agreed to pay 6.9 percent interest, down from 7.2 percent a year earlier, according to J.D. Power's estimates. They still were on track to receive higher average monthly payments than a year earlier, but just barely — $729 instead of $725 in August 2023. That $4 rise occurred despite average new-vehicle transaction prices falling 4.1 percent to $44,039 and incentive spending rising 60 percent to $3,035 per vehicle.

Falling used-vehicle prices leading to lower consumer trade-in equity might have nudged monthly payments upward. The average used-vehicle transaction price dropped 4.5 percent to $27,999, and the average trade-in gave the consumer only $7,774 — down 16 percent from a year earlier.

Thomas King, president of the data and analytics division at J.D. Power, said in a statement September 2024's auto sales ought to be lower than a year earlier because the Labor Day weekend falls partly in August.

"With that, all eyes will be on interest rates and the anticipated changes that could help new-vehicle affordability through the end of the year," King said in the statement.