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Automotive consumers are going through affordability challenges available in the market for brand spanking new autos regardless of common down funds dipping to just about the bottom stage in 4 years, based on a brand new report.
An evaluation by Edmunds discovered that the typical down cost for brand spanking new automotive purchases fell to $6,020 within the third quarter of 2025. That is the lowest stage for the reason that fourth quarter of 2021 and is down from $6,433 within the second quarter of 2025 and $6,619 within the third quarter of 2024 – however the affordability of latest autos stays a problem for shoppers.
The share of automotive consumers with month-to-month funds exceeding $1,000 remained persistently excessive, accounting for 19.1% of all financed new automotive purchases within the third quarter, close to the file of 19.3% within the prior quarter. For used autos, month-to-month funds of greater than $1,000 hit a file excessive of 6.1%, up from 5.6% within the second quarter.
“In Q3, affordability in the new-car market remained stretched, with buyers putting less money down, financing more and relying on longer terms to keep monthly costs in check,” stated Jessica Caldwell, Edmunds’ head of insights.
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Automotive consumers proceed to face affordability challenges within the new automotive market. (David Paul Morris/Bloomberg through Getty Pictures / Getty Pictures)
“But compared to the near-new market, where inventory has been constrained by lean pandemic-era sales and reduced leasing activity, new vehicles seem to have emerged as the more compelling option,” she continued.
“With the potential for lower APRs and tariff-related price increases yet to materialize in any meaningful way, shopping for a new vehicle may have felt like the smarter play in Q3 – and could have given the new car market a modest boost,” Caldwell added.
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Automotive consumers are turning to bigger loans with longer durations to buy new vehicles. (Andrej Ivanov/Bloomberg through Getty Pictures / Getty Pictures)
Greater than 1-in-5 automotive consumers who financed their buy took out loans stretching seven years or extra, with Edmunds analysts reporting that 84-month or longer loans made up 22% of latest automotive loans within the third quarter. That is down barely from 22.4% within the final quarter, however is larger than the 18.5% reported within the third quarter of 2024.
Automotive purchasers are additionally taking up bigger loans than they’ve earlier than, with the typical quantity financed for brand spanking new car purchases rising to $42,647 within the third quarter, up from $42,388 within the second quarter of 2025 and $40,713 within the third quarter of 2024.
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Edmunds reported that sellers’ promotional financing was restricted within the third quarter of 2025. (Justin Sullivan / Getty Pictures)
Excessive rates of interest have continued to current a problem for consumers, with the typical annual share charge (APR) at 7% within the third quarter – which marked the third straight quarter by which the typical was at or above 7%.
The Edmunds report famous that promotional financing by sellers was restricted within the third quarter, with simply 3.4% of loans carrying a 0% charge whereas 18.3% of loans carried charges below 4%. The share of loans with an APR of 4% or larger was 71.6% – whereas an additional 13.8% of loans had an APR of 10% or larger.
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Analysts famous that the Federal Reserve slicing rates of interest by 25 foundation factors in late September occurred on the finish of the quarter and subsequently did not have a major affect within the third quarter.
