People Are Spending More on New Cars Than Ever Before

If you made a down payment on a car recently, you might have noticed that you’re spending a little more on it than you’d expected. The same thing might be true when it comes to the monthly payments on your vehicle’s loans. As it turns out, it’s not something in the air or an unexpected feeling; instead, both down payments and loan payments did, on average, increase in the last quarter of 2023.

That’s one of the biggest takeaways from an Edmunds analysis of what people were spending on cars in the fourth quarter of 2023. Edmunds found that the average monthly loan payment rose to $739 and the average down payment was up to $7,074. Comparable figures related to used vehicles were also up in the fourth quarter of last year.

Those weren’t the only indicators that people are spending more on new vehicles. Another statistic on the rise in Q4 was the percentage of vehicle buyers spending over $1,000 per month on their car or truck — a figure that rose to 17.9%, as compared to 15.7% in the fourth quarter of 2022. This could mean more people are opting for higher-end vehicles — or it could be a sign that the market as a whole is trending towards more expensive vehicles.

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There are signs of greater complexity afoot here; Edmunds’ report also notes that a growing number of car buyers in Q4 used 0% APR financing relative to the previous quarter. The company’s head of insights, Jessica Caldwell, addressed what this could mean for buyers in the new year.

“Incentives are slowly coming back as inventory improves,” Caldwell said. “Most consumers are looking for low APRs with longer loan terms, so the growth in those loans is helpful to lure consumers who have been sitting out due to adverse financing and pricing conditions.” For a year with some hard-to-parse sales narratives, this data offers a lot to think about as 2024 begins — whether or not you yourself are in the market for a new car.