The shortage of low or no interest rate deals in the new-vehicle market drove the average loan interest to a 10-year high last month, according to Edmunds.
And as many car buyers cope with sticker shock, Edmunds also found that most customers weren't willing to buy a new compact or midsize vehicle, rather than a truck or SUV, to lower their payments. A lease is often considered a tool to lower new-vehicle payments, but even payments on the most commonly leased vehicles have surged since 2016, the last time customers with 2019 lease returns were likely in the market.
The average interest rate on new-vehicle financing reached 6.3 percent in February, the highest since February 2009 and an increase of more than 1 percentage point from a year earlier. Of all financed deals, only 3.2 percent had no interest, compared with 8.3 percent in February 2018. And only 18 percent of shoppers received a rate below 3 percent in February, compared with more than a quarter of customers last year, Edmunds said in a statement Friday.
As vehicle costs and interest rates continue to rise, more shoppers have been priced out of the new-vehicle market, but most are committed to the style of vehicle they initially wanted, said Jeremy Acevedo, Edmunds' manager of industry analysis.
"We really haven't seen people make too many concessions in the style of vehicle they're looking for. While there's alternatives out there that are more affordable, it doesn't look like that's where shoppers are flocking," Acevedo told Automotive News.