Car shoppers looking to get a break from rising interest rates didn't find it in March, as the average interest rate on a new vehicle loan hit its highest level in a decade.
According to the car shopping experts at Edmunds, the annual percentage rate (APR) on new financed vehicles is expected to average 6.36 percent in March, compared to 5.66 percent last year and 4.44 percent five years ago.
Edmunds analysts note that buyers were able to find more zero percent finance offers in March compared to the first two months of the year, but these deals are much harder to come by than they have been historically.
About 4 percent of all financed deals in March had zero percent interest rates, compared to 7.44 percent last year and 7.59 percent in 2014.
"Things just keep getting tougher for new-car shoppers," said Jessica Caldwell, executive director of industry analysis. "Interest rates have crept up every month so far this year, and new vehicle prices continue to hover near record highs. We're on the cusp of what could be a pretty dramatic shift in the market, simply because a big chunk of buyers are getting priced out."
Edmunds experts note that in the first quarter of this year, an increasing number of car buyers are being pushed into higher financing brackets. Edmunds data reveals that shoppers receiving interest rates of 10 percent or higher constituted 14.1 percent of the market in March, the highest level seen since February 2008.
"It's pretty alarming to see that a sizable segment of new-car shoppers are financing cars at rates that we'd normally associate with used vehicle purchases," said Caldwell. "The good news is that the Fed has halted rate hikes for now and we're edging closer to the summer selldown season when the number of incentive offers starts heating up. But without automakers stepping in to offer a reprieve, interest rates around 6 percent are likely the new normal."
Find out more at www.edmunds.com.