Car loan rates rise, new car affordability improves, car thefts spike

1. Average new and used car loan rates tick up in March

New data from Edmunds shows car loan rates are steadily on the rise so far in 2024, potentially putting a damper on car buyer purchasing power.

Zooming out: Inflation pressures are causing lenders to protect their profits. One of the ways they do this is by raising interest rates. Today, not even borrowers with strong credit are immune.

When loan rates rise, borrowing money becomes more expensive and when combined with high costs overall – it’s a double whammy to car buyer wallets. 

Data dive:

• Average new car loan rates ended March at 7.2%.

• Typical new car interest rates have increased each month since January but are still below the high of 7.6% in October 2023.

• Used car loan rates jumped 0.3% from February to March and are now at 11.9%, a new all-time high. The previous record was 11.6% in October 2023.

What it means: Historically high interest rates threaten average monthly payments. With rate cuts nowhere in sight and rising inflation, interest rates on car loans are likely to keep increasing.

2. New car affordability moves in favor of consumers last month

Big picture: The trends used to measure the affordability of new cars improved slightly for car buyers last month, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

But analysts say it might not last long. 

By the numbers:

• New vehicle transaction prices (ATP) decreased to $47,218 – down $2,550 from the market peak in December 2022.

• The average incentive spend (discounts) from automakers increased 11% to $3,121 – up 102% year over year.

• New car inventory was nearly 2.74 million units – a 52% increase from one year ago.

• The income needed to buy the average new car declined to a median of 36.9 weeks.

The result? The estimated monthly payment for a new car fell by $9 to $744 month-over-month.

Of note: New car prices in the U.S. are still 15.5% higher compared to March 2021.

What the experts are saying: “The positive moves were assisted by the first material decline in interest rates in over two years,” said Cox Automotive Chief Economist Jonathan Smoke. “However, given the move-up in rates so far in April, that decline is likely to be short-lived.”

Why it matters: The return of incentives and new car inventory is pushing prices down, but high interest rates have offset any drastic changes to average monthly payments.

3. Over 1 million vehicles reported stolen in 2023

At a glance: Car thefts soared across the U.S. last year. In total, 1,020,729 vehicles were reported stolen, an increase of about 12,000 vehicles from 2022.

What vehicles are stolen most often?

Data from the National Insurance Crime Bureau shows that full-size Chevy and Ford pickup trucks, older Honda sedans, and Hyundai/Kia vehicles from 2011 to 2022 suffered the most from theft.

Of note: Theft claim frequency for 2003–2023 Hyundai/Kia models was almost seven times higher than for all other makes in the first six months of 2023.

This surge is linked to a viral TikTok challenge that demonstrated how to steal these cars without a key.

Facing lawsuits from frustrated jurisdictions, Hyundai/Kia responded by releasing new anti-theft software earlier this year.

What the experts are saying: “Criminals are employing increasingly sophisticated methods to steal vehicles, including the use of advanced technology to bypass security systems,” said David J. Glawe, President and CEO of NICB. “From keyless entry hacks to relay attacks on key fobs, perpetrators are exploiting vulnerabilities in modern vehicle security measures with alarming success rates.”

Looking ahead: With car thefts spiking, it's no surprise that auto insurance rates are up across the board. Car insurance costs were up 22.2% last month, the biggest increase since the 1970s, according to the Bureau of Labor and Statistics. 

If these trends continue, expect another record-breaking year in 2024.