Zero percent financing deals resurfaced during Memorial Day sales events as dealers struggled last month with mounting new-vehicle inventories, according to car-shopping site Edmunds.
The uptick in no-interest deals dragged the average new-vehicle interest rate down for the first time in 2019, but the trend isn't expected to last through June.
Jeremy Acevedo, Edmunds' manager of industry analysis, said automakers are reluctant to lower interest rates amid their own escalating costs, including those from current and prospective tariffs.
"It's just so much more expensive for automakers to be extending these rates in a climate where interest rates aren't so close to zero as they were for so long," Acevedo told Automotive News.
The average interest rate for new vehicles financed in May declined 17 basis points from the previous month to 6.1 percent, but that was still 43 basis points above last year's 5.67 percent.
No-interest deals constituted 5.7 percent of financed transactions for the month, compared with 6.3 percent the previous year and just 3.2 percent in April, according to Edmunds.