Car shoppers have faced persistent affordability issues all year and that did not change in the third quarter of 2025. Average down payments for new vehicles fell to their lowest level in nearly four years, according to a new report from Edmunds. The data reveals that buyers are stretching their budgets thin, relying on smaller down payments and longer loan terms to manage near-record monthly costs.
Edmunds’ Q3 2025 financing data shows the average down payment for a new vehicle dropped to $6,020, a level not seen since the fourth quarter of 2021. This figure is down from $6,433 in the second quarter of 2025 and $6,619 in the same period last year.
At the same time, the number of consumers committing to monthly payments of $1,000 or more remained high, accounting for 19.1 percent of all financed new-car purchases. This is just shy of the record 19.3 percent set last quarter. The trend was even present in the used-vehicle market, where the share of $1,000 or more monthly payments reached a new record of 6.1 percent.
How are Consumers Handling Affordability Issues?
To cope with high prices, shoppers are financing larger amounts and extending their loan terms. The average amount financed for a new vehicle rose to an all-time high of $42,647 in Q3. More than one in five new-car loans (22 percent) now stretch for 84 months or longer.
“In Q3, affordability in the new-car market remained stretched, with buyers putting less money down, financing more and relying on longer terms to keep monthly costs in check,” said Jessica Caldwell, Edmunds’ head of insights. “But compared to the near-new market, where inventory has been constrained by lean pandemic-era sales and reduced leasing activity, new vehicles seem to have emerged as the more compelling option. With the potential for lower APRs and tariff-related price increases yet to materialize in any meaningful way, shopping for a new vehicle may have felt like the smarter play in Q3 — and could have given the new car market a modest boost.”
High interest rates continue to be a significant factor. The APR for new vehicle loans held steady at 7.0 percent for the third consecutive quarter. Promotional zero percent APR deals were scarce, offered on just 3.4 percent of loans. In contrast, the vast majority of buyers (71.6 percent) financed their vehicles at rates of 5 percent or higher.
New Model-Year Vehicles Aren’t Changing Financing Trends
At the end of Q3, 2026 model-year vehicles accounted for approximately 38 percent of inventory on dealer lots. However, Edmunds analysts found little difference in financing costs or discounts between the outgoing 2025 models and the new 2026 models.
The average APR for a 2025 model was 6.9 percent, compared to 7.1 percent for a 2026 model. Similarly, the average discount from MSRP was $2,119 for a 2025 model versus $1,431 for a 2026 model.
“Even with the model-year sell-down in full swing, the smarter purchase might not seem as obvious as it has been in years past,” said Ivan Drury, Edmunds’ director of insights. “With pricing and financing differences between 2025 and 2026 models so narrow, shoppers will benefit from prioritizing the features and content that they want.”
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