Zero-percent interest auto loans halve in June

Zero-percent loans accounted for 5.6 percent of total finance deals last month, down from 9.5 percent in June 2017, Edmunds says. Photo credit: DAVID PHILLIPS

The share of zero-percent financing deals nearly halved in June from a year earlier, a sharp decline that could signal the end of “cheap and easy” auto finance deals, Edmunds said.

The reduction surprised Jeremy Acevedo, manager of industry analysis for Edmunds, because such deals typically are popular in June.

“When you think about even three years ago when we entered the summer driving season, that’s where we would see numbers much closer to 15 percent,” Acevedo said. “The fact that we’re not even in that ballpark really does portend a big change for the end of summer sales that we could see in the coming months.”

Zero-percent loans accounted for 5.6 percent of total finance deals, down from 9.5 percent in June 2017, an indication that automakers aren’t hellbent on liquidating outgoing inventory, Acevedo said.

The reduction could reflect lenders tightening auto loan standards, Acevedo said, or that automakers are willing to let vehicles sit longer on dealership lots.

“We could be in the middle of a paradigm shift where this is no longer the preferred tactic of removing outgoing model vehicles,” Acevedo said. “I don’t know if it’s a bad sign, but it does seem to signify the end of really sweet finance deals.”

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