Dealers are seeing solid online leads and healthy showroom traffic, but deals are stalling once monthly payments come up.
The core problem: Even though the Federal Reserve cut its benchmark rate by 0.25% at the end of October, auto loan rates moved the opposite direction, exacerbating affordability problems.
According to Kelley Blue Book, the average new-car APR rose to 9.41% in September and climbed another 19 basis points in October.
Lenders tightened credit approvals and reduced subvented loan programs, leaving buyers waiting for rate relief that never arrived at the dealership.
For example, a CDK Global survey of 1,300 in-market car shoppers found that 53% are waiting for interest rates to drop before buying. And the holdout rate jumps higher for electrified vehicles—59% of PHEV shoppers and 62% of EV shoppers say they'll sit out purchases due to interest rates.
Why it matters: The disconnect between Fed rate cuts and auto loan rates creates a credibility gap at the F&I desk. Buyers see headlines about rate relief, then face rising monthly payments or extended loan terms.
Between the lines: According to J.D. Power's 2025 U.S. Automotive Financing Satisfaction Study, nearly 29% of borrowers are now categorized as "financially vulnerable," with lending satisfaction scores trailing financially healthy borrowers by a wide margin.
"Communication and clarity are where lenders and dealers can most improve customer experience today," said J.D. Power's Patrick Roosenberg.
Patrick Roosenberg
J.D. Power
Bottom line: A modest share of lenders eased auto-credit standards in October, but rising APRs mean affordability will remain the primary brake on sales until rate relief actually reaches retail.
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