Financing a new vehicle purchase continues to grow increasingly out of reach for many consumers, according to the car shopping experts at Edmunds. New data from Edmunds reveals: 

• The average annual percentage rate (APR) on new financed vehicles in Q1 2023 climbed to 7%, compared to 4.4% in Q1 2022, which is the highest level Edmunds has on record since Q1 2008. However, Edmunds analysts note that March marked the first time after 14 consecutive months of increases that the average new-vehicle APR stayed flat (at 7%), which they attribute to a moderate increase in subsidized financing by automakers.

• The average monthly payment for new vehicles hit a record high of $730 in Q1 2023, compared to $656 in Q1 2022.

• 16.8% of consumers who financed a new vehicle in Q1 2023 committed to a monthly payment of $1,000 or more — a new all-time high according to Edmunds — compared to 10.3% in Q1 2022 and 6.2% in Q1 2021.

• The average down payment for a new vehicle climbed to a record high of $6,956 in Q1 2023, compared to $6,083 in Q1 2022.

 "Since inventory levels are improving, interest rates are now topping the list of the greatest obstacles that automakers will be facing in 2023 to move metal," said Jessica Caldwell, Edmunds' executive director of insights. "But with major challenges come great opportunities: Since interest rates are at the forefront of consumers' minds, any automaker or dealer that can advertise incentives related specifically to interest rates will likely get more attention. This could be a powerful marketing tool that would enable sellers to tap into the significant pent-up demand that has been building over the past few years and convert that demand into actual sales."

 Edmunds analysts took a closer look at financed new vehicle purchases in Q1 2023 and calculated the average monthly payment, amount financed, APR, down payment and total interest paid — in each case based on loan term lengths. A table containing Edmunds' findings is included below.

Edmunds experts note that these figures highlight the stark contrast between the consumers who are able to take advantage of lower APR offers and those who can't. Although quarterly figures appear to reflect that the average loan term has remained static at around 70 months, Edmunds analysts say term lengths don't tell the full story — which is that more car shoppers are being pushed to the extreme ends of the finance terms spectrum. 12.3% of consumers opted for 36- or 48-month loan terms in Q1, the highest Edmunds has on record since Q4 2009, while a majority of consumers are extending loan terms out as much as possible in order to increase affordability.