Get access to the same vehicle valuation tool that dealers rely on. With Black Book, you’ll have insider data to accurately assess trade-in and purchase values—empowering you to negotiate the best possible deal.
Most car buyers don’t typically think of autumn as a great time to buy a car, but it’s the perfect time if you know where to look. Whether you’re planning to buy, hoping to sell, or are just curious about where the industry is headed, you’ve come to the right place. Buckle up as we steer you through the latest trends, from brand inventories and market conditions to financial forecasts. Let’s roll!
New Car Market Fall Update
The new car market still hasn’t reached so-called ‘normal’. Will it ever? Only a fool would make bold predictions after what we’ve all witnessed this decade. However, let’s talk about what we do know.
This autumn, we’re seeing an increase in cars on the lot, yet a significant disparity persists between automakers in terms of inventory levels. The current industry average hovers just under 60 days in terms of Market Day Supply. Why should you care about Market Day Supply (MDS)? This metric is crucial when understanding how much bargaining power you might have at the dealership. Brands with a high MDS are more eager to shift their inventory, and therefore, more likely to negotiate on price.
The High Inventory Brands
In the present market, Infiniti, Chrysler, Lincoln, Ford, Dodge, Buick, and Jeep have high inventory levels. This makes them prime targets for savvy buyers looking to negotiate a better deal. Here’s a look at nationwide inventory for the most negotiable new car brands:
Make
Market Day Supply (Nationwide 9/1/23)
Infiniti
119
Chrysler
179
Lincoln
128
Ford
99
Dodge
190
Buick
113
Jeep
179
Market Average
72
As you can see, all of these brands are dealing with a surplus of new car inventory right now. The longer that a new car sits on a dealer’s lot, the more negotiable it becomes for the knowledgeable car buyer. Dealers pay ‘floorplanning costs’ to keep inventory, so every day cuts into their profit margins. Learn how to use this information to your advantage with this 100% free Car Buying Cheat Sheet.
Low Inventory But High Demand
On the flip side, if you’re looking at Kia, Honda, Subaru, Lexus, BMW, and Toyota, be prepared for a bit of a struggle. These brands are facing low inventory levels. In some instances, new arrivals are pre-sold before they even hit the lot!
Surprisingly, Subaru remains a brand that’s willing to negotiate even when their inventory is low. Let’s take a look at some examples of today’s Subaru inventory:
These are the top trends that our team of Car Coaches are watching this fall season. Each of these variables has the potential to disrupt the new car market in significant ways.
Inventory Surge: The buildup of new car inventory has already begun, but the question remains, will it last into fall? With sky-high interest rates continuing to dominate buyer’s mindsets, we think it will. We predict a buildup of new vehicle inventory as we near the end of 2023, slowly but surely.
Manufacturer Incentives: Manufacturer incentive spending is at a two-year high, accounting for 4% of the transaction price on average. Brands like Ram and Jeep have recently advertised new models at 10-15% below MSRP. If manufacturers increased their incentives to pre-pandemic historical norms around 7-9%, that would entice more buyers to take action. We don’t expect automakers to raise incentives at such a rapid pace by winter, however.
The UAW Wildcard: There’s speculation of a 10-20 day UAW strike that could cause short-term hiccups. While we don’t expect this to be a game-changer, it’s something to keep an eye on. It would, however, be a bigger deal for automakers like Stellantis and General Motors. Analysts estimate that a 10-day strike would cost them about $5 billion.
CarEdge New Car Market Seasonal Rating: It’s a ‘fine’ time to buy a new car.
Better deals are anticipated this winter, but depending on what vehicle you’re in the market for, this autumn just might be the perfect time to negotiate a great deal.
Used Car Market Fall Update
While used car prices have slightly decreased, they are still far above historical averages. This means you’re unlikely to snag a bargain, especially if you’re gunning for a reliable vehicle with a clean history for under $20,000.
Pro Tip: Never enter the used car market blind. Always get a pre-purchase inspection (PPI) to understand the future maintenance needs and overall condition of the car.
The Trade-In Landscape
Trade-in values will continue to slowly decline as wholesale auction values are expected to keep falling. Following historically steep declines in wholesale used car prices in July and early August, we expect a more gradual decline in the fall.
Whereas used cars, trucks and SUV values were falling at a rate of -1.00% to -1.5% weekly as of last month, we expect weekly used car values to decline by around -0.5% to -0.3% for most of this season. Why? There’s no indication that a glut of used car inventory will arrive on the market any time soon to drive down values quickly.
The best used car sellers (especially those looking to trade-in) should hope for is slow but steady drops in value in September through November. You’re likely to get more for your trade-in or used car sale today than you will in a few months.
CarEdge Used Car Market Seasonal Rating: very difficult for buyers on a budget.
This is especially true if you’re looking for a vehicle of decent, reliable quality for under $20,000. Interest rates incentivize large down payments and cash buyers, but most of us don’t have the means to put $10,000 or $20,000 down.
If you’re in the market for a new or used car, here’s our most important advice for you: Generally, say NO to market adjustments. A lot has changed since the madness and mayhem of late 2021 and early 2022. The exceptions are true specialty vehicles like Ford Bronco Raptor or Toyota RAV4 Prime, which are so in-demand that markups are almost a given.
Ford’s inventory is overflowing in 2023. Indeed, the brand known for its robust line-up seems to be outpacing the current car market’s appetite. Paradoxically, price tags on these vehicles have climbed a staggering 27% since 2019. It appears Ford is navigating uncharted waters with an abundance of cars at their dealerships, waiting for buyers.
For those considering adding a new Ford to their garage, this might just be your golden opportunity. Let’s explore further.
Ford Inventory Update
In the automotive world, a balanced market dances around the 60-day inventory supply benchmark. This means, without the influx of any new stock, dealerships should ideally exhaust their current inventory in a two-month span at the prevailing sales rate. In 2023, Ford’s numbers have dramatically eclipsed this industry norm.
Currently, Ford boasts a 96-day supply, translating to a whopping 318,339 cars available across American Ford dealerships. Some models like the all-electric Mustang Mach-E and Ford’s van lineup, including the Transit and E-Series, have even higher inventory supplies, with the former leading at an impressive 214 days.
Even the iconic Mustang isn’t zipping away as speedily as one might expect, with a 168-day inventory. F-150 inventory is climbing as ‘trimflation’ pushes truck prices ever higher. As we approach Labor Day 2023, F-Series inventory sits at 117 days nationwide. For the best-selling electric truck on the market, the F-150 Lightning, there’s currently a 97-day supply nationwide with 3,632 for sale.
As Labor Day 2023 approaches, let’s delve deeper into the inventory landscape of every Ford model.
For comparison’s sake, here are the ten new car models with the highest inventory right now.
Make
Model
Market Day Supply
Total For Sale
Total Sold (45 Days)
Lincoln
Aviator
403
4,771
533
Jeep
Renegade
393
11,550
1,322
Jeep
Cherokee
364
4,606
570
Ram
Ram 2500
354
23,910
3,042
Chrysler
Pacifica Hybrid
344
7,235
947
Jeep
Grand Wagoneer
331
3,771
513
Jeep
Gladiator
291
21,743
3,360
Ram
Ram 1500 Classic
247
5,051
920
Mitsubishi
Outlander PHEV
241
1,679
313
Maserati
Grecale
234
2,171
417
This is serious stuff, folks. When an automaker inches north of 80 days’ supply of new cars, it’s noteworthy. When best-selling models are all over 100 days’ supply, that’s big news. Ford’s luxury nameplate is also flooded with unsold new cars.
Lincoln Has It Even Worse
Ford Motor Company’s premium brand has an unprecedented inventory problem right now. Just how much unsold Lincoln inventory is sitting on lots right now? Lincoln overall has a 125-day supply. Here’s the breakdown by model:
If you’re looking for a more premium SUV, Lincoln dealerships should be willing to negotiate on pricing with inventory numbers like these. See localized inventory and pricing insights with CarEdge Data.
Use This to Negotiate
Why on Earth would we be sharing inventory numbers with the masses? Does anyone care? In fact, you should care if you’re in the market for a new Ford. Real-time inventory data is just one of the many data points that our CarEdge Coaches use to help our members. When inventory is high, dealers are more likely to budge on every aspect of the deal, from trade-in valuation to out-the-door pricing.
In simple terms, here’s how these numbers can be used as leverage. Looking for an affordable electric vehicle with great range, fast charging and the federal tax credit? Show your local Ford dealer that you’re familiar with the Mustang Mach-E’s inventory surplus. Ready to negotiate a sweet deal on a new F-150, Explorer or Mustang? You now have data on your side.
Access ALL of the latest car market data with CarEdge Data, your one-stop resource for auto insights. Ready for a pro to assist? Work with a CarEdge Coach for live support from start to finish, or schedule a Consult for a quick chat. We’re on your side! Let us know how we can help you save the most with your new or used car deal.
Labor Day is not just about barbecues and the beach; it’s also one of the best times to get a great deal on a new car. If you’re considering buying a car, these Labor Day deals are the ones worth your time. Our team of Car Coaches pored over every offer and selected the real deals among the crowd. Here’s a breakdown of the best Labor Day car sales to look out for from major car brands.
Cadillac is offering a 1.9% APR for 36 months for the CT4 and CT5. Also, the XT5 and XT6 come with a 1.9% APR for 36 months plus a $1,500 purchase allowance when you finance with Cadillac. Deals last until 9/5/23. See the details at cadillac.com and browse listings here.
Chevrolet Labor Day Sales
Chevrolet’s Summer Drive Event is on, and deals are valid through 9/5/23. Qualified buyers can score 1.9% APR for 36 months when financing with GM. Chevrolet is also offering cash incentives for the Equinox ($1,250), Blazer ($1,250), Traverse ($1,000), Silverado ($2,500), Malibu ($750), and Camaro ($750). For the Silverado, a total of $6,500 is available for buyers with a trade-in. Notably, these offers won’t apply to factory-ordered vehicles. Learn more about Chevrolet deals and browse local inventory.
Chrysler Sales This Month
Depending on region, get up to $2,500 cash incentives for the Chrysler Pacifica Plug-In Hybrid. States that participate in the CARB emissions program qualify for the full incentive. Others qualify for $750 cash incentives. For the Chrysler 300, buyers get a $2,000 cash incentive. Learn more at chrysler.com and browse local listings.
Dodge Lease Deals
There are some decent Dodge lease offers this month. These are the best offers:
Hornet: $449 per month for 36 months with $4,249 due at signing
Durango: $478 per month for 36 months with $3,999 due at signing
Charger: $461 per month for 36 months with $4,249 due at signing
Challenger: $410 per month for 36 months with $4,249 due at signing.
Ford EV inventory is climbing, and the automaker is offering incentives to move vehicles off the lot. Lease a Mustang Mach-E for just $409 per month for 36 months with $5,188 due at signing. Lease a F-150 Lightning for $633 per month for 36 months with $6,332 due at signing.
Ford also has some good financing deals right now. The Mustang qualifies for 1.9% APR for 72 months with a $1,000 cash offer. The Bronco Sport, Escape, Edge and Explorer all qualify for 2.9% APR for 60 months and between $1,000 – $2,000 in cash bonuses. The F-150 and F-150 Lightning both qualify for 3.9% APR for 60 months and $500 customer cash, which is a good deal in today’s high-interest market. See Ford’s current offers in your area.
Honda has a few great financing offers this month. Finance the Ridgeline for 0.9% APR for 24 to 36 months, and 2.9% APR for 37 to 60 months. The Accord, Accord Hybrid and Passport qualify for 2.9% APR for 24 to 48 months, and 3.9% APR for 49 to 60 months. Other Honda models qualify for 3.9% APR or higher.
Honda’s brand loyalty program offers as much as $1,250 in cash incentives right now. The cash offer ranges from the Ridgeline ($1,250), Passport ($1,000) and all other models ($500). Honda also has a number of great lease deals this month, which you can learn more about here. See the details at Honda.com.
Hyundai offers some of the best Labor Day car sales in 2023. Ever since the IONIQ 5 lost the federal tax credit, Hyundai has been upping incentives for the EV. Today, IONIQ 5 and IONIQ 6 leases include a $7,500 discount. IONIQ 5 and IONIQ 6 financing offers start as low as 0.99% APR financing for up to 48 months. Current Hyundai owners and lessees can save an additional $2,500.
The Kona features a cash offer of $1,500, the Tucson offers $2,000 off, and the popular Santa Fe has a $2,500 cash offer. All Hyundai Labor Day sales are valid through September 5, 2023.
Make no payments for 90 days with the 2023 Jeep Grand Cherokee. The 2023 Jeep Cherokee Altitude Lux is advertised for 15% below MSRP for an average savings of $6,300. The 2023 Jeep Compass and Renegade are 10% off MSRP, but be wary of unexpected dealer fees that seem to plague Jeep dealerships. The Gladiator features employee pricing currently.
The Kia EV6 features $5,000 cash back and 0.9% APR through 9/5/23, although Kia electric models lost eligibility for the federal EV tax credit. The Kia Niro EV qualifies for $3,750 cash back and 0.9% financing. State and local incentives may apply. The Kia Soul, Forte, and Stinger qualify for 2.9% APR financing. See details for Kia’s Labor Day sales.
This Labor Day, Lexus is offering $2,000 lease cash for the ES and ES Hybrid. The new electric Lexus RZ and NX plug-in hybrid qualify for $7,500 in lease cash. Learn more about Lexus deals near you at Lexus.com.
Lincoln has a few good deals for Labor Day 2023. Finance the Lincoln Corsair and Nautilus for 3.9% APR for 60 months with $2,000 cash when you have a trade-in. See details from Lincoln.
Nissan’s Thrill of the Drive sales event lasts through September 5, and features deals on financing and leases.
These are the best Nissan deals this Labor Day: Lease an Altima SV for $329/month for 36 months with $3,099 due. Lease a Nissan Rogue for $409/month for 36 months with just $2,009 due.
Ready to go electric? Lease the new Ariya starting at $369/month with $4,129 due. Nissan is offering 0% financing for the Rogue, Murano, and Titan. Explore more Nissan Labor Day sales at NissanUSA.com.
Ram is advertising 10% off MSRP for the Ram 1500 Classic as inventory rises on dealer lots. Despite slow truck sales, Ram and parent company Stellantis aren’t doing much in the way of financing offers. As Labor Day approaches, 2.9% APR is the best they can do for the Ram 1500. Learn more about Ram deals near you.
The Toyota National Sales Event lasts through 9/5/2023, and offers decent (but not stellar) financing and lease deals.
These are the standouts among the deals: The following models qualify for 2.99% APR: 2023 Tacoma 4×2 is the featured financing deal at 2.99% APR for 60 months. Front-wheel drive Highlanders are offered at 3.49% APR. All of the following models qualify for 3.99% APR: bZ4X EV, Camry (excluding hybrids), Corolla (excluding hybrids), Corolla Hatchback, Highlander AWD (excluding hybrids), RAV4 (excluding hybrids).
Currently, the Taos and Tiguan both qualify for 1.9% APR for 36 months, which is a great financing offer. If a six year loan is in your future, the Atlas and all-electric ID.4 are offering 3.9% APR for 72 months.
Volvo’s Summer Safely Sales Event ends on August 31, and it’s not yet clear what deals and offers will replace it come Labor Day weekend. Check volvocars.com as the holiday approaches for the latest sales.
There’s Room For Negotiation
In the realm of car sales, mastering negotiation can pivot a purchase from a financial burden to a steal of a deal. Given the present Labor Day car sales, fine-tuning your negotiation prowess could equate to hefty savings. Remember, substantial Manufacturer’s Discounts are a sign that there’s room to haggle.
Prepared to harness the power of negotiation for your upcoming car investment, potentially saving thousands? You’re in the right place. Team up with a Car Buying Coach to negotiate using auto industry insights typically unavailable to the public.
If a one-time consultation is more your style, CarEdge Consult offers expert advice tailored for your needs. For those looking to embark on a DIY car buying journey powered by rich auto market data, CarEdge Data is the perfect fit.
Purchasing a car, whether it’s your first or your fifth, can be a daunting task. Our team of car buying pros has created this guide to how to buy a car for one simple reason: buying a car shouldn’t be a miserable experience. We’ve laid out a thorough step-by-step guide to simplify the process for you. It’s 2025, and you have tools that yesterday’s car buyers dreamed about. It’s time to put data to work for you!
Imagine if you were paid to do your homework back in school. When it comes to buying a car, it’s a concept that’s not all that far-fetched. When you approach car buying with proper preparation, you’re sure to save more and spend less. Before diving headfirst into the buying process, here’s where you should begin your journey:
Budget For Your Car
This might come across as a no-brainer, but there’s more to setting a budget for car buying than meets the eye. Here’s what you should think about BEFORE shopping for a car.
How much can you afford to spend monthly on total transportation expenses? Note: You don’t want to tell salespeople at the dealership that you’re thinking about monthly payments. They can and will use this against you! However, it’s important to consider for your own budgeting.
Consider additional costs: Auto insurance rates depend on a number of factors, from the type of car and zip code to your credit score to driving record. In the United States, the average monthly premium for auto insurance is $179 per month. Your monthly auto expenses will include your payment if financing, auto insurance, fuel and maintenance. If it helps, create a spreadsheet to add it all up!
Taxes & Registration: Local charges can add up. Know what your state and local tax rates are. In some states, car taxes are annual and can add up to hundreds or even thousands of dollars for luxury cars. Find out if you’ll have to pay annual property taxes for your car.
Have you ever asked yourself, what do I actually need? Do you really need a full-size SUV or a $100,000 truck? Have you budgeted for a car? Now’s the time to ponder these questions and more. Remember: the more economical the car, the lower your cost of ownership is likely to be. Maintenance, insurance and taxes are all lower for more affordable cars. Here are a few other things to consider:
Determine Your Wants: Do you want a new or used car? Do you prefer an electric vehicle, hybrid, plug-in hybrid, or old-fashioned gas power? What are you willing to let go of to save money? These are all worth considering before falling in love with a car on the lot.
Check Reviews & Ratings: Don’t skip this step! It’s crucial to know about a vehicle’s reliability, safety ratings, depreciation, and how it fares in consumer reviews. CarEdge Comparisons and Consumer Reports are great places to start your research. If you might sell the car in a few years, it’s critical that you consider the cost of depreciation.
2. The Big Decision: New vs. Used
Choosing between new and used can make a big difference in your budget and what you get.
While a brand-new car entices with the allure of cutting-edge technology, pristine interiors, and that new car smell, it also comes with a higher upfront cost. On the other hand, opting for a used car can be easier on the wallet, providing the opportunity to snag a higher-end model at a fraction of its original price. However, used car buyers should tread cautiously, considering factors such as the car’s history, mileage, and any wear and tear. Always get a pre-purchase inspection. You want to know what to expect maintenance-wise! If the seller refuses a pre-purchase inspection, we think you should move on to another deal.
In essence, the choice between new and used boils down to a balance of budgeting and desired features.
Used car prices fluctuate more than new car prices. New car prices generally always rise with each new model year. On the other hand, used car prices undergo serious ups and downs. We track used car prices, and you can see this week’s update here.
3. Qualify For Financing
Financing is possibly the most daunting part, but with the right preparation and resources, it doesn’t have to be. Here’s what you should know BEFORE heading out to buy a car.
Credit Score: What’s your credit score? What are today’s average rates for your credit score? A higher score often means better interest rates. It’s essential to know where you stand, and if you have time before buying, what you can do to raise your credit score. In general, it’s important to pay all bills on time, and never miss a payment. There are plenty of free ways to monitor your credit these days.
Debt-to-income ratio: Your debt-to-Income ratio is calculated by dividing all your monthly debt payments by your gross monthly income. Expressed as a percentage, it’s a snapshot of your financial obligations in relation to your earnings. As a general rule, auto lenders cap your debt-to-income ratio to 45% to 50%, but ideally it should be under 35%.
If your debt to income ratio is well above 35%, consider making payments to lower your debts before applying for an auto loan. You’ll qualify for a better rate, and save money on interest.
Shop for loans the right way: Look into multiple sources of financing, including credit unions, local banks and auto manufacturer offers. For guidance, refer to this auto financing cheat sheet.
Compare Loan Terms: Understand the length of your loan, monthly payments, and interest. Remember, the longer you have the loan, the more interest you’ll be paying. Generally, it’s best to not exceed 60 month loan terms.
Today’s average auto loan rates range from 9% APR with new cars to 13% for used cars. That adds up quickly, especially for big borrowers with longer loan terms!
Whether you’re buying new or used, you now have the tools at your fingertips to browse car listings with market insights on your side. Start with CarEdge Car Search, the internet’s first car listings featuring behind-the-scenes market data.
Ready to negotiate with unmatched market data?CarEdge Insights is your DIY car buying toolkit. Use Insights to see local prices, local supply of similar cars, and negotiability factors for every listing. Check out CarEdge Insights to see how you can save.
Once you’ve found multiple sweet deals, it’s time to take it for a test drive!
Test Drive: Don’t rush it. If you’re serious about buying the car, you should experience it on the highway, in city streets, with the windows up, down, and just about any other condition you will find yourself in. This is your chance to check for red flags (but we always recommend an independent pre-purchase inspection too).
Ask Questions: Understand every aspect of the deal, from CarFax vehicle history to warranties and optional add-ons like service packages. Expect the salesperson to pitch you products you may not want or need, and it’s up to you to push back against them. A common sales tactic is to tell you the monthly cost, while hiding the total cost of the product. Don’t fall for that!
Negotiate: Prices can ALWAYS be negotiated. For your complete guide to negotiating car prices, download this FREE car buying cheat sheet!
You’re close to the finish line! Now is NOT the time to rush through paperwork.
Review everything: Go through the contract and ensure all terms are as agreed. Be on the lookout for sneaky fees, last-minute price changes, and forced add-ons.
Ask for copies of everything. You have the right to a copy of every contract you sign. If you’re agreeing to add-ons, warranties or any other product, be sure to get a printed copy of the product’s contract. Review the auto financing cheat sheet for examples.
When you’re happy with the deal, it’s time to sign the paperwork: Make it official. If you’re uncertain about any terms, refer to this comprehensive car buying glossary and the car buying cheat sheet. Don’t sign until you understand exactly what you’re paying for!
You’re On Your Way!
Buying a car is no small feat, but with thorough research and the right resources, you can navigate the process with confidence. We’ve got 100% FREE resources to help you begin your journey with the empowerment that comes along with car buying know-how.
Here are the car buying essentials our team created just for you:
Here at CarEdge, our mission is to take the misery out of car buying for everyone, and to make the entire car buying process more transparent. What’s our plan for accomplishing these lofty goals? We’ve put a growing team of auto industry veterans to work for the good guys, you the car buyer!
With CarEdge Concierge, our pros listen to your needs, and take it from there. We find the perfect fit, negotiate savings on your behalf, present you with the deal, and ship it to your home (if necessary). Learn more about buying with CarEdge. Save at least the cost of our service, or get your money back!
The average car payment has been on an upward trajectory for some time, and 2023 is no exception. Today, we’re dissecting what the average car payment looks like and why it’s been rising. We’ll explore how average monthly car payments crossed the $1,000 threshold, and how you can navigate this landscape to spend less.
The Average Car Payment in 2023 Ticks Higher
(New Cars)
2023 Q3
2023 Q2
2023 Q1
Average Term
68.4
68.5
68.8
Monthly Payment
$736
$733
$730
Amount Financed
$40,149
$40,356
$40,468
Average APR
7.4%
7.1%
7.0%
Down Payment
$6,907
$6,823
$6,956
According to Edmunds’ latest data, the share of $1,000+ monthly car payments has hit an all-time high. The rise is attributed to various factors: high interest rates, increased automaker prices, and dealer practices.
Reaching a new record, 17.5% of new car loans in Q3 2023 required a monthly payment of $1,000 or more. That’s up from 17.1% in Q2 2023 and a massive increase from the meager 4.3% back in 2019.
The average car payment in Q3 2023 reached a record high of $736 per month for new cars, up 4.5% since Q3 2022, and a 32% increase from 2019. Meanwhile, the average monthly car payment for used cars is $567, marking a 46% rise from 2019, but up less than 1% from Q3 2022.
Take a look a the average new car payment over time:
Data source: Edmunds. Graph by CarEdge.
The average monthly payment for used cars has followed a similar path upward, as we can see here:
Data source: Edmunds. Graph by CarEdge.
In pre-pandemic times, there was a slow but steady rise in car payment amounts. As the auto industry came out of the pandemic recession and the following chip shortage, car prices went through the roof, bringing average monthly payments along with them.
Let’s talk about why car payments are so high right now, and what you can do about it.
Average Car Prices in 2023
So, how much have car prices gone up? The average transaction price for a new car is $48,451 in 2023, a 25% increase since 2019. For used cars, it stands at $28,381, still 37% higher than in 2019, despite a slight decrease from the previous year. To make matters worse, interest rates for used car loans are commonly over 10% these days.
Why are average monthly car payments and overall prices rising so fast? The auto industry can’t simply blame it on inflation, as we’ll get into below. But first, let’s talk about financing.
Borrowing Gets Expensive, Down Payments Increase
Car buyers are making larger down payments as the cost of borrowing money increases. The average auto loan rate is now 7.4% APR for a new car loan, and 11.2% APR for a used car loan. These are the highest auto loan rates the market has seen since 2007.
When will car loan rates go down? Simply put, it’s up to the Fed. The Federal Reserve sets the ‘Federal Funds Rate’, which largely determines how much it costs for banks to borrow money from each other, ultimately driving consumer loan rates.
Raising interest rates is a tool used to combat inflation. The thinking goes that when borrowing gets too expensive, excessive spending will be discouraged, and in turn demand for goods and services will cool down to the point that inflation slows.
Car loan rates will remain high until The Federal Reserve begins to lower interest rates at their Board meetings. Inflation needs to cool down for that to happen. Things are headed in the right direction, but we’re not there yet.
Even with auto loan rates at 20-year highs, there ARE ways you can lock in big savings on loan interest. Here are the most effective ways to save on interest, according to our CarEdge team of experts:
Improve your credit score: Before shopping for a new car, check your credit score and work on improving it. Paying off outstanding debts, making timely payments, and keeping your credit utilization low can all help boost your score.
Shop around for rates: Don’t limit yourself to the dealership’s financing options. Shop around for car loans from banks, credit unions, and online lenders to find the best interest rates.
Opt for a shorter loan term: While a longer loan term may result in lower monthly payments, it also means you’ll pay more interest over the life of the loan.
Make a larger down payment: A larger down payment can help you save on interest by reducing the loan amount and demonstrating to lenders that you’re financially responsible. Aim for a down payment of at least 20% of the car’s purchase price
Budgeting for Your Car Payment: What the Experts Say
Our team of Car Coaches is made up of professionals who have decades of experience in the auto industry. Rather than squeeze more money out of every sale at the dealership, these car pros help drivers SAVE money with their auto. We spoke to our team of Coaches to learn how much money today’s car buyers should aim to spend on their monthly car payment.
The consensus was broad: the CarEdge team advises keeping your monthly car payment below 10% of your monthly take-home pay. With gas, insurance, and maintenance, it should ideally be well below 20% of your monthly income. It’s worth noting that negotiation can play a pivotal role in ensuring you spend less on your car.
Here are a few essential FREE resources to help you budget for your car purchase:
Here’s a Free Car Payment Calculator that will help you understand what price range you can afford with your down payment. It’s most useful if you have an idea of what loan rates you might qualify for.
The Road Ahead
Most automakers have an oversupply of new cars right now. Over the past year, we’ve seen dealer lot inventory climb above and beyond what we typically see in a healthy, stable car market. Automakers and dealers like to have roughly a 60 day supply of new cars on their lots. Today, we see more and more models well above a 100 day supply. For some, like the Ford Mustang Mach-E, Jeep Renegade and Ram 1500 truck, inventory exceeds 200 days.
Something has to give. Floorplanning costs mean that the car dealers themselves pay interest for every day that a car sits on their lot. Plus, no one wants a two-year old ‘new’ car. With each passing day, dealers are incentivized to move their inventory off the lot.
We’re seeing used car prices fall rather quickly, yet new car prices are more complicated. Listing prices remain high (and in some cases outrageous), but our team of CarEdge Coaches is seeing greater negotiability on the new car market.
Dealers are more willing to lower their prices and remove add-ons and markups. However, in most cases, this is only true when the buyer is prepared to put some work into the deal with negotiation know-how. Don’t expect softball deals in today’s new car market. But don’t fret: we’re here to help.
How to Negotiate and Save
Our team of Car Coaches created this 100% free guide to negotiating a car purchase with one goal: to save you time and money. Print it and bring it with you to the dealership!
Looking for more car buying help? Search our free guides, and join the CarEdge Community today! We’re here to help you negotiate car prices confidently. When it comes to car buying, knowledge certainly is power.
Ready to work 1:1 with your own car buying coach? Learn more about CarEdge Coach, your path to ultimate savings! Looking for more of a DIY route to savings? We created CarEdge Data just for you. For the first time ever, behind-the-scenes market data is at your fingertips, empowering car buyers everywhere to negotiate with confidence. Remember, the secret to smart car buying isn’t solely about discovering the car that captures your heart. It also involves understanding the market you’re shopping in. Despite escalating prices, opportunities remain for those willing to undertake comprehensive research and exhibit patience.
Stay informed, be patient, and you might find that the perfect deal is just a stone’s throw away. We’re here to help!
CarEdge Insights
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