Average New and Used Vehicle Monthly Payments Expected to Climb to Record Highs in Q1, According to Edmunds
“Shrunken inventory continues to wreak havoc on both the new and used vehicle markets, and shoppers who can actually get their hands on a vehicle are committing to never-before-seen average payments and loan terms,” said Jessica Caldwell, Edmunds’ executive director of insights.
Edmunds data reveals that the average down payment on new vehicles climbed to $6,026 in Q1 2022, a 27{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9} increase compared to Q1 of 2021 and the first time this figure has surpassed $6,000. The average down payment on used vehicles saw a less notable increase, climbing to $3,574 in Q1 2022, or a 7{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9} increase compared to Q1 2021. But Edmunds analysts note that used loan durations set a new record this quarter, climbing to 70.4 months compared to 68.2 in Q1 2021.
Edmunds analysts also note that longer loan terms might seem appealing to car shoppers because they offer lower monthly payments, but caution that they can also present risks to consumers down the road.
“Many car shoppers are likely seeing red when faced with the prospect of paying sticker or above sticker price for new vehicles, and are defaulting to the used market to seek relief. But this is not a normal market, and financing a used vehicle could potentially end up costing you more in the long run,” said Ivan Drury, Edmunds’ senior manager of insights. “If you’re financing a three-year-old vehicle with a 70-month loan, you’ll have a nine-year-old vehicle by the time you complete your payments. That’s risky business when you consider wear-and-tear, and you could be at greater risk of needing to roll negative equity into your next car loan.”
Edmunds experts advise that consumers in need of a vehicle, and thinking that a used vehicle will save them money, should instead consider buying a new or certified pre-owned vehicle, since those offer more favorable interest rates and warranties.
“It’s easy to be blinded by the initial sticker shock of paying MSRP for a new vehicle, but car shoppers need to focus on the bigger financial picture,” said Drury. “Used vehicles might save you some money upfront on the purchase price, but make sure you’re not paying too much to the bank in the form of high interest rates.”
Edmunds experts advise that consumers calculate the total amount they are planning to finance in their next purchase by using the Edmunds Auto Loan Calculator, which factors in sales price, tax rates, title and registration, trade-in values, financing terms and more.
Quarterly New-Car Finance Data
(Averages)
|
Q1 2022 |
Q1 2021 |
Q4 2021 |
|
|
Term |
69.9 |
70 |
70 |
|
Monthly Payment |
$648 |
$575 |
$639 |
|
Amount Financed |
$39,340 |
$35,040 |
$39,216 |
|
APR |
4.4{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9} |
4.5{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9} |
4.2{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9} |
|
Down Payment |
$6,026 |
$4,729 |
$5,808 |
Quarterly Used-Car Finance Data
(Averages)
|
Q1 2022 |
Q1 2021 |
Q4 2021 |
|
|
Term |
70.4 |
68.2 |
70.1 |
|
Monthly Payment |
$538 |
$432 |
$524 |
|
Amount Financed |
$30,830 |
$23,958 |
$30,095 |
|
APR |
7.7{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9} |
8.1{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9} |
7.5{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9} |
|
Down Payment |
$3,574 |
$3,345 |
$3,503 |
About Edmunds
Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America’s best workplaces by Fortune, Great Place to Work and Built In, Edmunds is based in Santa Monica, California. Follow us on Twitter, Facebook and Instagram.
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SOURCE Edmunds
