Rental vehicles fall within specific price brackets
Listen up, car shoppers! You might've noticed that new car loans have been getting cheaper lately, hitting their lowest point in over a year and a half back in April. But don't get too excited, because the experts ain't predicting any big reductions for the rest of the year.
Let's take a look at the numbers. That 17% annual interest rate on new car loans? It's the lowest we've seen since October 2023, and it's the sixth month in a row of declines. But used car loan rates? They're still hovering around 28% annually. And while new car loan rates dropped by 4.4 percentage points since last year, used car loan rates only saw a decrease of 1.2 percentage points over the same period.
One reason for the lower rates on new cars is the sweet deals from Chinese manufacturers and their subsidies. Plus, they've got a big chunk of the market, accounting for 54% of new car sales in the first quarter. And let's not forget about that state-subsidized program for domestic cars, which helps keep those rates down.
But don't expect those prices to continue dropping like a rock. Experts believe there's still a gaping demand for new cars, and they don't foresee any significant price drops happening by the end of the year.
Now, if you're thinking about getting a used car instead, you might be wondering why the rates are so much higher. Well, that's mainly due to the key rate and what the banks expect will happen to it in the future. But even with those high rates, the number of used cars in loans remains steady, around 34% in April 2025. Some folks are drawn to the lower cost of used cars, the wider range of choices, and the opportunity to snag brands that aren't officially sold new in Russia. And let's not forget that the used car market is huge—in April 2024, there were over half a million more used cars sold than new ones.
On the bright side, the reduction in interest rates we're seeing is due to a decrease in the cost of getting hold of those resources, and it's not going to hurt the banks. Lower interest rates mean lower risks, and banks love to make loans more accessible. So if the markets continue to cool down and there's a slowdown in retail lending, we might see some more relief for car buyers.
But don't count on it being a major reduction. Experts are predicting a slight decrease of 1-3 percentage points due to a variety of factors, including unmet demand, government support, and the desire from manufacturers and dealers to clear out their stock of unsold vehicles. So, the APRs might drop a little, but don't hold your breath for a huge change.
In the end, it's a tough market out there, but knowledge is power. So keep an eye on those rates and demand, and you might find just the right car at the right price. Happy shopping!
[1] Fed Sets Interest Rate: https://www.federalreserve.gov/monetarypolicy/summary-of-the-federal-open-market-committee.htm[2] Current Car Loan Rates: https://www.usnews.com/cars/car-loans/new-car-loan-rates[3] Auto Sales Report: https://www.autostat.ru/marketing/celli/2025/04/15/16622/[4] Fed's Anti-Inflation Strategy: https://www.federalreserve.gov/monetarypolicy/2022-annual-report/part1/sec50-52/text/
Technology plays a significant role in the current business of financing new and used cars, as it enables banks to assess creditworthiness more efficiently. For instance, financial technology (fintech) companies often use machine learning algorithms to analyze data and make quick decisions about loan approvals.
Moreover, technology advancements in the automobile industry, such as electric vehicles and self-driving cars, could potentially impact future financing options and interest rates. As these technologies gain traction, manufacturers may offer unique financing packages to incentivize consumers to purchase these newer models, leading to possible fluctuations in both new and used car loan rates.
