There are more new car buyers than ever before who are paying more than $1,000 per month to finance their new vehicle.
A study from Edmunds has found that 15.7 per cent of consumers who financed a new vehicle in Q4 2022 committed to a monthly payment of $1,000 or more. This is the highest percentage of consumers paying this much in history and represents a significant increase from the 10.5 per cent in Q4 2021 and the 6.7 per cent in Q4 2020.
The study from Edmunds also found that a growing number of consumers are also paying more than $1,000 per month for a used vehicle, 5.4 per cent to be precise. This is an increase from the 3.9 per cent of Q4 2021 and the 1.5 per cent from Q4 2020.
Read: Odometer Roll-Backs Have Increased 7% Over The Last Year
It has also been revealed that more shoppers of luxury vehicles are choosing to purchase their vehicles outright rather than lease them. Edmunds has revealed that new-vehicle lease penetration dropped to 16 per cent in Q4 2022 compared to 29 per cent in Q4 2019. New-vehicle lease penetration in the luxury segment dropped to 26 per cent in Q4 2022 from 53 per cent in Q4 2019.
“Just as new and used car prices finally started to cool off in Q4, rapidly rising interest rates created an even greater barrier to entry for consumers who rely on financing – which is the vast majority of car shoppers,” Edmunds’ director of insights, Ivan Drury, said. “Although the last quarter of the year typically skews toward luxury vehicle purchases, this near-record percentage of vehicles that are being purchased rather than leased reflect tougher market conditions far more than affluent consumers shelling out a bit more than usual to treat themselves over the holiday season.”
