Used-vehicle financing set a pair of records during the fourth quarter, according to data compiled and shared by Edmunds.

Edmunds reported on Wednesday that down payments in Q4 jumped $201 year-over-year to $4,122. The figure got to that record by ticking up $11 from the amount Edmunds spotted in Q3.

Meanwhile, impacted in part by activities at the Federal Reserve, the interest rate attached to the paper booked in Q4 set a record in Edmunds’ database, too. Analysts found that climbed to 11.6% on average in the fourth quarter, topping Q3’s average of 11.2% and 10% recorded a year ago.

The three other Q4 used-financing metrics Edmunds highlighted on Wednesday actually moved lower. Average terms dipped to 69.9 months, while the average amount financed came in at $28,643. Those movements resulted in monthly payments edging $6 lower to $561.

In the new-car world, Edmunds spotted record-breaking metrics, as well, some that likely make procuring a new vehicle for subprime customers out of their financial reach.

Edmunds pinpointed four trends when examining new-vehicle financing in Q4, including:

— Lower APRs became more available for longer-term contracts in Q4. Analysts explained the notable rise was heavily influenced by December figures, a sign that there are more incentives in the market.

— The share of new-vehicle sales with 0% APR financing ticked up to 2.3% of sales in Q4 from 1.1% in Q3. This Q4 increase also came at an average term length of 54.3 months, up 9.5 months from Q3 and the highest term length since Q4 2021, when 7.1% of loans featured 0% APRs at an average term length of 56.8 months.

— Even still, monthly payments and down payments on new vehicles hit new record highs in Q4. Monthly payments climbed to $739, up slightly from the previous record last quarter of $736 and from Q4 2022’s mark of $717. Down payments crossed the $7,000 threshold for the first time, up to $7,074 from $6,907 in Q3 and $6,780 in Q4 2022.

— The share of consumers with new-vehicle monthly payments of $1,000 or more reached a new record once again. The share increased to 17.9% in Q4, up from 17.5% in Q3 and 15.7% in Q4 2022. Of note, Q4 figures are more heavily influenced by luxury sales than other quarters.

“On the surface, car financing appears to be following the harsh trend line of the past few years, with average monthly payments and down payments reaching all-time highs for new vehicles,” said Jessica Caldwell, Edmunds’ head of insights. “But there are some very encouraging signs as we kick off 2024 when considering the makeup of deals in the latter half of Q4 2023.

“Incentives are slowly coming back as inventory improves. Most consumers are looking for low APRs with longer loan terms, so the growth in those loans is helpful to lure consumers who have been sitting out due to adverse financing and pricing conditions,” Caldwell continued in a news release.

Edmunds analysts reviewed new-vehicle contract details from transactions throughout 2023 and discovered that lower APRs became more available for longer term deals as the year went on:

— In June, APRs between 0% and 3.99% were found on loans with an average term length of 50 months. By December, loans featuring these low APRs were available at an average term length of 56 months, a half-year increase.

— 0% APRs in particular represented an even greater increase of 16.3 months from 2023’s midpoint (40.5 months) to close (56.8 months).

“While shorter term loan deals are still most common with low APR financing, it is encouraging to see more reasonable term lengths becoming more prevalent with APRs below 4%,” Edmunds director of insights Ivan Drury said in the news release.

“Finding these deals still requires a bit of work, however. If you’ve declared any New Year’s resolutions involving less screen time, you might need to make an exception for online car shopping, especially if other resolutions include tightening your spending,” Drury went on to say.

Quarterly New-Car Finance Data (Averages)

2023 Q4 2022 Q4 2023 Q3
Term 67.8 69.7 68.4
Monthly Payment $739 $717 $736
Amount Financed $39,977 $40,833 $40,149
APR 7.4 6.5 7.4
Down Payment $7,074 $6,780 $6,907


Quarterly Used-Car Finance Data (Averages)

2023 Q4 2022 Q4 2023 Q3
Term 69.9 70.5 70.1
Monthly Payment $561 $563 $567
Amount Financed $28,643 $30,217 $29,328
APR 11.6 10.0 11.2
Down Payment $4,122 $3,921 $4,111

Source: Edmunds