Edmunds: New-Vehicle Financing Challenges Persist

New-vehicle affordability challenges persist for car shoppers according to new third quarter data shared by Edmunds.  This is evidenced by many factors,  two being that average new-vehicle down payments are at a near a four-year low and $1,000+ payments are holding near record levels.

Here's Edmunds' Q3 2025 data as shared in a press release:

• Down payments plunge to the lowest level in nearly four years. Edmund reports the average down payment for new-car purchases dropped to $6,020, the lowest level since Q4 2021. This compares to $6,433 in Q2 2025 and $6,619 in Q3 2024.
• $1,000+ monthly payments remain persistently high. Edmunds data also shows the  share of buyers paying monthly payments of $1,000 or more accounted for 19.1% of all financed new-car transactions in Q3, which is near the record set last quarter at 19.3%. For used vehicles, $1,000+ monthly payments hit a record high of 6.1%, up from 5.6% in Q2. 
• More than 1 in 5 car loans stretch 7 years or longer. Edmunds analysts also report that 84-month or longer loans made up 22% of financed new-car purchases in Q3, slightly down from 22.4% last quarter and 18.5% in Q3 2024. 
• Shoppers are taking on larger loans than ever before. According to Edmunds data, the average amount financed for new vehicle purchases rose to $42,647 in Q3, up from $42,388 in Q2 2025 and $40,713 in Q3 2024.
• High interest rates remain the norm. The average annual percentage rate (APR) for new vehicle purchases held at 7% in Q3 — marking the third straight quarter this figure was at or above 7%. Edmunds analysts say that promotional financing was limited in Q3: Just 3.4% of loans carried a 0% rate while 18.3% of loans carried rates below 4%. By contrast, 71.6% of loans carried an APR of 5% or higher, and 13.8% were at an APR of 10% or higher. Edmunds analysts also note that the Fed's late September rate cut came at the end of the quarter and thus did not have a significant effect in Q3. 

"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," said Jessica Caldwell, Edmunds' head of insights. "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. 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." 

Edmunds analysts note that the model year sell-down is well underway, with 2026 model year (MY) vehicles accounting for roughly 38% of on-lot inventory at the end of Q3. However, they say average interest rates and discounts between incoming and outgoing model years were pretty similar: The average APR was 6.9% for 2025MY compared to 7.1% for 2026MY, and the average discount from MSRP was $2,119 for 2025MY compared to $1,431 for 2026MY. 

"Even with the model-year sell-down in full swing, the smarter purchase might not seem as obvious as it has been in years past," said Ivan Drury, Edmunds' director of insights. "With pricing and financing differences between 2025 and 2026 models so narrow, shoppers will benefit from prioritizing the features and content that they want." 

Credit: Edmunds.

Shoppers considering refinancing their auto loan can calculate how much interest they'll pay over the life of a loan with Edmunds' auto loan interest calculator.