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With the highest interest rates since 2006, the average cost of vehicle financing reached 29.5% per year in 2025, according to the Central Bank. Families reduce purchases, banks tighten credit, and the dream of owning a car fades.
Vehicle financing in Brazil is experiencing the most expensive moment in history. With the Selic rate set at 15% per year by the Monetary Policy Committee (Copom), the average cost of loans for car purchases reached 29.5% per year, according to recent data from the Central Bank.
This scenario makes it so that, for many Brazilians, buying a financed car becomes practically unfeasible.
The impact is felt throughout the automotive chain. Automakers report a decline in sales, dealerships see fewer approved contracts, and consumers are postponing their dreams of owning a car.
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“We are experiencing the highest credit costs in recent history,” stated Márcio de Lima Leite, president of Anfavea (National Association of Motor Vehicle Manufacturers), to Quatro Rodas magazine.
High Selic Raises Credit Costs and Stalls the Market
The Selic rate, set by the Central Bank, is the basic interest rate of the Brazilian economy. It serves as a reference for all credit operations from personal and mortgage loans to automotive financing.
When the Selic rises, banks have to pay more to raise money and pass those costs on to consumers. The result: installments rise, credit decreases, and consumption falls.
The Focus Report, published weekly by the Central Bank, shows that the financial market expects the Selic to remain at 15% until the end of 2025. This means that, even without new increases, financing will remain expensive for a long time.
The Weight on the Consumer’s Wallet
According to a survey by Santander Financiamentos, a car costing R$ 80,000 can cost almost R$ 115,000 at the end of financing, considering average interest rates of 29.5% per year. Even with a down payment of 30%, monthly installment amounts can exceed R$ 2,000.
In 2020, when the Selic was only 2% per year, the total cost of the same financed vehicle would be up to 35% lower. That difference reflects not only the increase in the basic rate but also the rise in delinquency and the greater perception of risk among banks, making credit more selective.
Financings Plunge and New Car Sales Recede
The automotive sector is feeling the immediate repercussions. According to Anfavea, the number of new cars sold through financing fell 20% in the first half of 2025, while credit grants for used vehicles shrank even more, 27% in the same period.
This phenomenon is not only Brazilian but the country stands out for its extremely high interest rates. Among the major economies, Brazil has the highest average cost of automobile financing, ahead of countries like Mexico, Chile, and Argentina.
Why Don’t Banks Lower Interest Rates?
Even with low delinquency, 4% among individuals, according to the National Financial System, banks keep rates high. This happens because the high Selic raises the cost of raising funds, making it less advantageous to offer long-term credit.
Additionally, the Legal Framework for Guarantees, created to facilitate the recovery of assets in case of default, has not yet produced the expected effects. Financial institutions remain cautious, especially in the used vehicles segment, which is considered riskier.
New and Used Cars Feel Different Effects
The consumer of new cars still has some relief from automaker subsidies and reduced rate campaigns, which offset some of the interest.
On the other hand, buyers of used and pre-owned vehicles face harsher conditions, with banks charging even higher rates, which can exceed 32% per year.
This difference has changed the profile of sales: vehicles priced at up to R$ 50,000 are returning to dominate the market, while models above R$ 100,000 are experiencing a significant decline in transactions.
How to Navigate High Interest Rates in Financing
Finance experts recommend that consumers reassess the timing of their purchase. The main tip is to increase the down payment, which reduces the financed balance and, consequently, the total cost.
Other recommendations include reducing the number of installments, comparing offers among banks and financial institutions, and checking the Effective Cost Total (CET), which encompasses fees, taxes, and insurances included in the contract.
In many cases, a consortium or planning for a cash purchase may be more advantageous in the long term.
Outlook for the Remainder of 2025
Economists do not see room for substantial cuts in the Selic until the end of the year. The Central Bank remains focused on controlling inflation, even if that means slowing consumption and credit.
If the basic rate remains at 15%, automotive financing will continue to be restricted to the segment of the population with high income or very well-rated credit.
“As long as the Selic stays at this level, new cars will become a luxury item in Brazil,” sums up economist Leonardo Furtado from Auto Shopping Internacional de Guarulhos.
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