According to Edmunds, the average auto loan rate was 5.75% in May, which is a level since back in 2009. New vehicle APRs in May 2017 was 5.04% and, in May 2013, it was 4.17 percent.
Even though interest rates have increased, car shoppers are not discouraged. In fact, Edmunds analysts say the possibility of better rates later in 2018 is luring people to the dealership.
Edmunds manager of industry analysis Jeremy Acevedo said people are encouraged to buy now as they see rates are rising and may not get as good of a deal in the next few months. He said it’s temporary pull-ahead effect and could cost auto manufacturers in the future.
4.7 percent more vehicles were sold in May, with a seasonally-adjusted annual rate of 16.91 million vehicles. In 2017, that number was 16.79 million. The increased sales were the result of people buying more pickup trucks and SUVs. Fiat Chrysler saw an 11 percent increase for its Jeep vehicles. The Ford F-series truck saw significant gains for May – the highest since 2000.
Edmunds said GM sales also rose 11.7 percent.
Car shopping website experts have notice interest rates rising and automakers reducing their zero-percent financinveg deals. Instead, they are using other incentives like cash-back bonuses to bring in customers.
Besides the higher transaction prices, another reason for the rise in new vehicle monthly payments in the increase in APRs. Monthly payments averaged $535, compared to last year’s $510. The average loan term has stayed at 69 months.
Buyers purchasing used vehicles had an average monthly payment of $399 with used-car rates increased to 8.22 percent.