While most used-vehicle financing metrics closed 2019 at a steady pace, Edmunds noticed the average interest rate for a new-vehicle retail installment contract fell for the third month in a row in December, dropping to its lowest point since February 2018.
 
Edmunds reported the annual percentage rate on new financed vehicles averaged 5.4% in December, compared to 5.5% in November and 5.9% in December of 2018.
 
Edmunds data showed that 22.4% of shoppers who financed their vehicle purchases in December 2019 got an interest rate below 3%, compared to 20.4% of those who financed purchases in December 2018.
 
"Automakers and dealers gave new-car buyers a lot of reasons to feel some holiday cheer in December," Jessica Caldwell of Edmunds said in a news release.
 
"Everyone knows new-car deals are usually sweetest at the end of the year, but it’s been a long time since financing offers were this good," she continued.
 
Meanwhile on the used-vehicle side, Edmunds determined that while terms and monthly payments in December mirrored the figures seen a year earlier, average APR on used financing dipped to 8.2% while the total amount financed rose by more than $400 year-over-year to $22,660.
Although interest rates took a dip, Edmunds pointed out new-vehicle retail prices are expected to hit near-record highs in December.
 
Edmunds data indicated that the average transaction price for a new vehicle will climb to $38,377 in December, compared to $37,260 last year and $33,773 five years ago.
 
"The December numbers aren’t always indicative of larger market trends because people tend to buy pricey luxury vehicles, trucks and SUVs this time of year," Caldwell said. "This drives up the average transaction price and lowers the average APR since these shoppers can usually qualify for the lowest promotional rates.
 
"But the fact that rates have been on a steady decline for the last several months bodes well for more favorable financing conditions in 2020," she continued.
 
Two other firms weighed in on how new-vehicle prices behaved in December, beginning with Kelley Blue Book. The valuation analysts at Kelley Blue Book reported the estimated average transaction price for a light vehicle in the United States was $38,948 in December. New-vehicle prices increased $656 (up 1.7%) from December of 2018, while falling $80 (down 0.2%) from November. 
 
"New-vehicle transaction prices finished the year on a high note, with the average rising nearly 2% and approaching the record set in November 2019," Kelley Blue Book analyst Tim Fleming said in a news release. "However, as retail demand fell in 2019, dealer discounts grew, approaching 7% of MSRP in December — the highest since July 2009.
 
"On a positive note, the discounts appear to be working as the average days in inventory fell by two days from the previous month," Fleming continued. "With sales expected to be down in 2020, anticipate the pressure to continue on new-car prices and incentives."