New Edmunds Data Sounds Alarm on New Car Affordability

Buyers are putting down the lowest down payments in four years, says Edmunds

According to new data on new-car financing trends from the car-buying authorities at Edmunds, customers are bringing the least amount of cash to dealerships to secure a down payment for the first time since 2021, as the average new-vehicle down payment has reached its lowest level since Q4 2021. The car-buying experts reported that the average new-vehicle down payment during Q3 2025 reached as low as $6,020, with the lowest payment ever observed being $5,921 in Q4 2021.

In a statement, Jessica Caldwell, Edmunds’ head of insights, noted that this figure represented a “stretched” sense of affordability among buyers in the new car market, as low down payments were accompanied by other signs that buyers were at their limits. These signs include buyers taking out higher loans and stretching out payment periods well past the typical advertised 60- and 72-month (5-6 years) terms.

Loan amounts and monthly payments are also on the rise

The average loan amount written rose to $42,647 in Q3 2025, up slightly from $42,388 in the previous quarter and $40,713 in the same quarter last year (Q3 2024). To make matters worse, a high APR likely accompanies these loans, as the average percentage remained at 7% during Q3 2025, marking the third consecutive quarter where the average APR was at or above 7%.

Broken down, Edmunds analysts state that Q3 wasn’t friendly to buyers in terms of automakers offering promotional sales rates. They state that just 3.4% of loans were at the coveted 0% rate, while 18.3% carried rates below 4%. Meanwhile, 71.6% of buyers signed onto loans with an APR of 5% or higher, while 13.8% secured an APR of 10% or higher.

In addition, they also report that 19.1% of buyers are committed to monthly payments of $1,000 or more on their new cars in Q3, while 84-month or longer loans made up 22% of financed new-car purchases, down slightly from the 22.4% share of buyers the previous quarter, but more than the 18.5% rate during the same time last year.

Despite signs indicating that financing a new car is a game that should be played by the financially fortunate and savvy, Caldwell argues in favor of new cars over “nearly-new” used cars for one specific reason.

“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,” Caldwell said. “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.”

Final thoughts

Edmunds experts also observed that buyers have been landing bigger discounts and lower rates on 2025 models, as retailers shift their inventory to reflect the new model year. The average interest rate for a new 2025 model sold during Q3 2025 was 6.9%, with an average discount of $2,119 from the sticker price, while 2026 model year cars had an average interest rate of 7.1% and a discount of $1,431. 

Despite this, Ivan Drury, Edmunds’ director of insights, said that this isn’t a clear sign that deals are to be had, and encourages buyers to do their research on one or more of the cars they’d like to purchase.

“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,” Drury said. “With pricing and financing differences between 2025 and 2026 models so narrow, shoppers will benefit from prioritizing the features and content that they want.”