Financing for a new or used vehicle is growing more expensive than ever, costing $1,000 or more for 15.7% Americans, according to Edmunds, a provider of automobile comparison costs.

That works out to monthly car payments of $1,000 or more for nearly one in six car owners, and is the highest percentage it’s ever been. This is up from such expensive car payments for 10.5% of car owners in the fourth quarter of 2021 and 6.7% in Q420.

6.5% APR

Driving this is the increase in the average annual percentage rate (APR) on new financed vehicles, to 6.5% in the fourth quarter of 2022, compared to 5.7% in the previous quarter.

“Just as new and used car prices finally started to cool off in Q4, rapidly rising interest rates created an even greater barrier to entry for consumers who rely on financing—which is the vast majority of car shoppers,” says Ivan Drury, director of insights at Edmunds.

Edmunds also found that consumers are putting more cash down on their purchases to offset rising costs, with the average down payment for new and used vehicles climbing to $6,780 and $3,921, respectively, in the fourth quarter.

In line with this, luxury new-vehicle lease penetration dropped to 26% in the fourth quarter of 2022, compared to the recent high of 53% in the fourth quarter of 2019.

Car Repos Rise

In related news, auto repossessions are on the rise, and industry analysts worry inflation and a recession could push them even higher.

With unemployment forecast to rise in 2023, inflation expected to remain high and the specter of a recession on the horizon, experts fear repossessions could tick higher.

At the start of the pandemic, when people got stimulus checks and lenders were more forgiving about late payments, repossessions fell. Inflated car prices and gasoline have caused people to fall behind on their car payments in recent months. Among lowest-income Americans, defaults are higher than they were in 2019.

• More Americans Default on Car Loans