SANTA MONICA, CA — May 1, 2020 — Zero percent finance deals surged to a record level in April as automakers pulled out all the stops to encourage new vehicle purchases during the coronavirus crisis. According to the car shopping experts at Edmunds, 0% finance deals accounted for 25.8% of financed purchases in April, compared to 4.7% in March and 3.6% in February. This is the highest level of 0% finance deals that Edmunds has on record dating back to 2004.
Edmunds analysts point to the abundance of 0% finance deals as the driving force behind a significant drop in interest rates. The annual percentage rate (APR) on new financed vehicles averaged 4.3% in April, compared to 5.8% in March and 6.3% a year ago. This marks the lowest average APR since August 2015.
"It's a buyer's market," said Jessica Caldwell, Edmunds' executive director of insights. "And while there aren't a lot of buyers right now, those in a position to purchase a new vehicle are taking advantage of the most generous financing programs we've seen this century."
Edmunds experts warn that some consumers might be making riskier purchasing decisions due to the greater availability of 0%, 84-month loan term deals. According to Edmunds data, the average loan term length hit a record high of 73 months in April, and 81% of car buyers who financed their vehicle agreed to a loan term between 67 and 84 months. Edmunds data also reveals that consumers are stretching their budgets for more expensive vehicle purchases — the average amount financed for a new vehicle climbed to a record high of $37,681 in April, while the average down payment dropped to $3,159 in April, a 21% decline compared to March and the lowest on record since July 2011.
"For the fiscally responsible buyer, this is a great deal, but for others, this could spell trouble," said Caldwell. "Although longer loan terms help make financing larger purchases more palatable, consumers who opt into these deals put themselves at higher risk for negative equity further down the road."
More insight into recent auto industry trends can be found in the Edmunds Industry Center at https://www.edmunds.com/industry/insights/.
| April 2020 | April 2019 | April 2015 | |
| Term | 73.4 | 69.4 | 67.8 |
| Monthly Payment | $584 | $553 | $490 |
| Amount Financed | $37,681 | $31,914 | $28,738 |
| APR | 4.3% | 6.3% | 4.8% |
| Down Payment | $3,159 | $4,383 | $3,425 |
| April 2020 | April 2019 | April 2015 | |
| Term | 68.4 | 67.4 | 66.2 |
| Monthly Payment | $426 | $411 | $380 |
| Amount Financed | $23,307 | $22,034 | $20,707 |
| APR | 8.9% | 8.8% | 7.8% |
| Down Payment | $2,522 | $2,742 | $2,362 |
About Edmunds
Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America's best workplaces by Fortune and Great Place to Work, Edmunds is based in Santa Monica, California, and has a satellite office in Detroit, Michigan. Follow us on Twitter, Facebook and Instagram.
