New-car shoppers are getting much more than a new set of wheels for themselves these days. They’re also landing the lowest interest rates from banks since the Federal Reserve began measuring them in 1971. These rates played a part in August’s light-vehicle sales jump of 9.5%.
Edmunds.com reported that Toyota , General Motors, Ford, Chrysler and Nissan are offering 0% financing on certain models. In fact, the auto information website also found that more than one in 10 car loans had an interest rate of 0% last month, while the average loan rate fell to 4.1%, the lowest of 2012.
These more-affordable loans were beneficial to subprime car buyers as well, as sales to consumers with a credit score between 650 to 679 rose 26% this year. Prime buyers with scores of 790-999 rose 7%, a report from J.D. Power & Associates found.
J.D. Power also discovered that new-vehicle loans of 60 months or more made up 32% of sales from the beginning of the year through August as more consumers financed vehicles, up to 59% from 53% in 2007. On the leasing side, J.D. Power found those sales rose to 21% from 13% in 2009.
With longer-term loans come smaller payments, and the average payment dropped to $462 from $483 in 2007. The average car price, however, rose to $32,384 from $30,880 in the same time period. The average lease payment fell to $419 from $479 five years ago.
At Black Book we see the peak in values for the year having been reached and for the past 6 weeks now the trending has been softening. We also see it as the fall seasonal adjustment necessary to make room for a new model year of vehicles. Nothing to be alarmed about, just part of the market. It is just that the ride has been so positive all year we are not accustomed to lower values. Still many opportunities exist in today’s used market and auction lanes. Ricky Beggs