DOWN! DOWN! DOWN! Core Inflation Cooling Hard And CPI Plunges Under Trump — Auto Loan Rates Set to Follow?
Posted on 9/11/2026 by Agent001
Auto credit has not been this easy to obtain in more than a decade. In August, lenders approved nearly 74 percent of new-car loan applications, and Cox Automotive’s Dealertrack Credit Availability Index reached its highest level since November 2015. Approvals have risen for five straight months. Average down payments sit near 13 percent, and more than 31 percent of contracts now stretch beyond 72 months. Negative equity—rolling leftover balances from an old loan into a new one—hit 57.4 percent. Ease of qualification has not brought cheaper money. The average contract rate climbed to 10.99 percent. Weekly bank and credit-union averages also ticked higher, with new-car quotes near 5.9 percent and used-car quotes near 6.7 percent in mid-September data. High transaction prices compound the pressure: the typical new vehicle sold for just over $50,000 in August.
A separate policy change could reshape demand. The IRS finalized a deduction of up to $10,000 in interest on qualifying new-car loans originated from 2025 through 2028, limited to passenger vehicles assembled in the United States and subject to income phase-outs. Used-car loans do not qualify. That tilts the after-tax cost of financing toward new, domestically built inventory and could pull some shoppers out of the used market.
Lenders have loosened terms rather than cut rates. Longer contracts and higher loan-to-value ratios keep monthly payments within reach even as principal balances and interest costs rise. Used-vehicle demand remains firm as buyers hunt for lower monthly outlays, yet wholesale values have been relatively stable. If more creditworthy shoppers chase the new-car deduction, used-loan volume could soften while new-loan volume holds or grows.
The next Federal Reserve meeting is days away. Any shift in the funds rate would feed through to auto APRs with a lag, but the current mix—easy approvals, stretched terms, elevated prices, and a new-car-only tax break—already sets the stage for divergent paths between new and used financing.So, spies: what happens next to new versus used auto rates?