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As rates rise, consumers push for affordable vehicle payments

April 19, 2019
Average loan rates for new-vehicle financing stood at 6.55 percent through April 1, which is 66 basis points higher than last year, Cox Automotive found. The average rate for a used-vehicle loan came in at 10.84 percent, 63 basis points higher than a year ago. The trends are causing payments to grow even faster.
Through March, according to Cox, average new-model monthly payments climbed 3.4 percent to $567, while average lease payments rose 2.7 percent to $500. While not rising as much, average used-vehicle payments still ticked up about 1 percent, to $414.
The rate information is likely bound to frustrate consumers, dealerships and finance companies.
Low monthly payments and reliability are driving automobile purchasing and leasing decisions among adults, according to a new PenFed Auto Financing Survey. The national survey conducted by Morning Consult focuses on financing priorities, buying preferences and car buying services.
"As auto industry trends push the limits of affordability, it’s no surprise that consumers prioritize a low monthly payment when making a new buy or lease decision," said Ivan McBride, vice president of auto lending product sales at PenFed Credit Union, which claims to be America’s second-largest federal credit union and serving 1.7 million members worldwide with $25 billion in assets.
The PenFed Auto Financing Survey was conducted March 26-29 among a national sample of 2,201 adults. The interviews were conducted online, and the data weighted to approximate a target sample of adults based on age, race/ethnicity, gender, educational attainment and region.
Key survey findings included:
• Almost half of adults (46 percent) rank monthly payments as the most important element of auto financing.
• Most adults (58 percent) who prefer to lease an automobile do so for a lower monthly payment.
• Forty-one percent of adults surveyed say the reliability of their current automobile is the biggest factor leading to their decision to purchase or lease a new vehicle. Three in four adults say a vehicle’s reliability (75 percent) and price (73 percent) factor into their decision to buy or lease a specific model.
• Most adults prefer to finance vehicle through credit unions (25 percent), over banks (20 percent) and dealerships (16 percent).
• Forty-one percent of adults would consider using a car buying service.