As an online survey conducted by Equifax showed more insight into how consumer might be haggling at the dealership over vehicle price and other contract terms, the costs those buyers are absorbing continues to climb, especially for new vehicles.

In April, interest rates on new-vehicle financing remained at elevated levels not seen since before the 2009 recession, according to the analysts at Edmunds.

Edmunds reported on Tuesday the annual percentage rate (APR) on new financed vehicles averaged 5.6 percent in April, marking the third straight month rates soared above 5 percent. This compares to an average APR of 5 percent in April 2017 and 4.2 percent in April 2013.

Edmunds experts say that consumer wallets are being squeezed in other areas as well.

Analysts indicated the average monthly payment on new vehicles averaged $535 in April compared to $509 in 2017 and $463 in 2013. The average amount financed increased to $31,318 in April compared to $30,315 last year and $26,679 in April of 2013.

Down payments also increased, reaching $3,911 in April, compared to $3,770 in 2017 and $3,494 in 2013.

“With more potential Fed rate hikes ahead, we don’t expect to see these higher vehicle ownership costs retracting unless automakers are willing to dig much deeper into their pockets,” said Jessica Caldwell, executive director of industry analysis for Edmunds.

“Considering the fact that rates were in this territory 10 years ago, this isn’t an extraordinary phenomenon, but it is going to take a readjustment in the minds of consumers. Car shoppers should brace themselves because this is likely a new normal,” Caldwell continued.

Meanwhile, the analysts at Kelley Blue Book on Tuesday reported the estimated average transaction price for light vehicles in the United States was $35,411 in April. They calculated new-vehicle prices have increased by $710 (up 2 percent) from April of last year, while falling $99 (down 0.3 percent) from last month.  

“Average transaction prices moved up another 2 percent in April, with most manufacturers reporting year-over-year increases,” Kelley Blue Book analyst Tim Fleming said. “Although fuel prices rose for the second month in a row and are nearing a $3 national average, Kelley Blue Book saw greater price increases for SUV models than with cars.

“Luxury SUVs performed particularly well, as less price-sensitive luxury buyers splurged for the latest models, such as the Lincoln Navigator (up 30 percent), Volvo XC60 (up 16 percent) and Infiniti QX50 (up 12 percent),” Fleming continued.

Additional buyer insights

Furthermore, whether they’re buying new or used, economical or luxury, Equifax recently elaborated about its online survey that gathered trends in awareness of credit amongst millennials and baby boomers, as well as affordability expectations of prime and subprime shoppers.

According to the survey conducted in February that included more than 1,000 participants, Equifax noticed there is a noticeable drop in just how much shoppers try to negotiate with the dealer between new and used vehicles.

Prime shoppers of new vehicles provide a “moderate to great” amount of negotiation 72 percent of the time, but this level drops to just 47 percent for used vehicles.

Subprime shoppers of new vehicles provide a “moderate to great” amount of negotiation 62 percent of the time, but this figure drops to just 44 percent for used vehicles.

What's more, Equifax found that 59 percent of prime millennials offer “moderate to great” negotiation effort versus 58 percent of prime baby boomers. However, this is the opposite for subprime millennials (50 percent) versus subprime baby boomers (53 percent).

Equifax explained there is a wider gap between those that try and do not try to negotiate new and used vehicles for prime shoppers, compared with subprime shoppers. Also, millennial prime shoppers do more negotiating than their Baby Boomer counterparts while this trend is switched for subprime shoppers.

When it comes to the amount of time spent online shopping for a vehicle, Equifax discovered there again is a slight difference between prime millennials and boomers versus that of subprime millennials and boomers. For prime shoppers, millennials average 8.6 hours online versus 9.1 hours for boomers. However, this is opposite for subprime, where millennials average 9.9 hours compared with 9.1 hours for boomers.

While the numbers do not represent a wide disparity, Rebecca Kritzman, senior director of automotive marketing at Equifax, pointed out the data shows that subprime millennials spend more time online shopping, whereas prime boomers spend more time shopping online.

“Knowing this data, dealers and lenders can better design targeted offers, promotions and incentives, either in an online environment or other media, depending on their known customer,” Kritzman said.

“It all starts with having the right data and truly understanding your customer, and the solutions introduced by Equifax are designed to help dealers and lenders gain a better foothold on the finer intricacies of each shopper to maximize each transaction opportunity,” she went on to say.

New-Car Finance Data

Used-Car Finance Data

Source: Edmunds