Finance companies secure higher average down payments in Q3


Finance companies mitigated their risk a bit during the third quarter as data released by Edmunds on Thursday showed higher average down payments for both used and new financing booked during the past three months.

Edmunds determined the more robust increase in average down payments came in connection with new vehicles, rising to $4,457 in the third quarter, compared to $3,891 last quarter and $4,045 a year ago.

Edmunds data also indicated that the average transaction price (ATP) for new vehicles rose significantly during the third quarter. Edmunds estimated that the ATP in Q3 climbed to $39,303, compared to $38,893 last quarter and $37,207 in Q3 of 2019.

Meanwhile, the valuation analysts at Kelley Blue Book reported the estimated average transaction price for a light vehicle in the United States was $38,723 in September. KBB said on Thursday that new-vehicle prices increased $940 or 2.5% from last September while ticking up $23 or 0.1% from August.

Due to increases in average down payments and average transaction prices for new vehicles, Edmunds mentioned that finance companies mitigated risk in other ways, too, as average contract terms dipped slightly in Q3 compared to the previous quarter. Edmunds also mentioned the average annual percentage rate (APR) for new vehicles saw a small lift, hitting 4.6% in Q3 compared to 4.2% in Q2.

“It’s clear that consumers who are purchasing vehicles right now are feeling quite secure in their financial position despite the pandemic. The discouraging unemployment numbers we’re seeing across the country likely aren’t reflective of the Americans in the new car market,” Edmunds executive director of insights Jessica Caldwell said in a news release.

“New-car shoppers are putting down more money and taking advantage of continued  low interest rates to upsize either to bigger vehicles or vehicles with more amenities,” Caldwell continued.

Kelley Blue Book analyst Sara Richards added this forward-looking perspective after reviewing that firm’s new-vehicle financing information.

“New-car transaction prices have climbed year-over-year, but remained flat for the past few months,” Richards said. “This may indicate supply challenges experienced over spring and summer have been corrected and OEMs are finally able to build up stock.

“If automakers seek to recover sales lost earlier in the year, incentives could climb dramatically, and transaction prices could remain flat or even dip in the future,” she went on to say.

Meanwhile, Edmunds analysts noted that some of these financing trends are trickling down into the used market as well.

Edmunds determined that the average down payment for a used vehicle also rose in the third quarter, climbing to $3,306 compared to $2,937 in the second quarter and $2,636 a year ago.

“These affluent car shoppers are also making the shift to used vehicles,” Caldwell said. “This could be due to supply shortages in the new market, or because some of these consumers are looking to be slightly more financially conservative with their vehicle purchase given the current economic environment.”

Quarterly New-Car Finance Data (Averages)

Q3 2020

Q2 2020

Q3 2019





Monthly Payment




Amount Financed








Down Payment




Quarterly Used-Car Finance Data (Averages)

Q3 2020

Q2 2020

Q3 2019





Monthly Payment




Amount Financed








Down Payment




Source: Edmunds

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