Every month, HSH collects the latest information on new and used auto loan rates from lenders in dozens of metropolitan areas around the US. The sampling of averages listed here includes only a few of the areas we survey. HSH typically surveys about 500 lenders in a given month.
National data, broken out into 36 month, 48 month and 60 month series of averages are available at low cost, including historical information. Please call for more information. Six-month graphs of these average auto loan rates can be found on our Statistical Release page.
Lending institutions and other market professionals can buy this data for their own use.
Auto News and Notes:
Fed trimmed short-term rates, and has kept them low... auto borrowers see some benefit.
While there isn't a one-for-one lockstep relationship with moves in the Federal Funds Rate, changes in that short-term cost of money certainly influence the rates for auto loans.
The Federal Reserve finished lowering the Federal Funds rate to present levels back in late 2008. Once that benchmark hit rock bottom, rates for auto loans drifted downward in 2009, then eased somewhat more quickly in 2010. The decline in rates was more substantial in 2011 and 2012; during that time, banks became stronger and more willing to lend and auto sales revived. Over the last couple of years, the downtrend for rates has continued, although at a slowing pace. Although average new and used auto rates eased about three-quarters of a percentage point over that time, last year contributed less than half of the total decline.
It's a common misconception that Fed moves have a lockstep effect on other kinds of loan rates. Short-term loan rates are affected by a lower Federal Funds rate to a degree, but most of these loans are largely still funded by locally-gathered deposits; those local deposits -- in the form of CDs, Passbooks and other time deposits -- are the lender's "cost of obtaining funds".
Those "cost of obtaining funds" (aka 'cost of funds') represent the interest rates paid to you for allowing your deposited money to be used by the lender. Now, lenders need to attract your deposit money, so they compete against other lenders by paying as high a rate as needed to attract you and still lend it out profitably. However, paying high rates for deposits means that the lender must charge higher rates for loans in order to preserve profitability... and if the rates are too high, you'll borrow somewhere else, and they'll make no profits at all.
With bank balance sheets slowly healing, and with continued improvement in the secondary market for auto loans, banks have been becoming more active in making these loans both for their books as well as for sale. The Fed's moves of the past few years have helped to lower the cost of money in open markets, and deposit rates have slipped as a result.
In turn, as the lender's "cost of funds" slowly decreases, the interest rates being charged on short-term loans should decrease, too. After all, the lender needs to attract borrowers as well as depositors in order to make money. However, lenders are still recovering from the losses caused by the recession, and remain wary of the risks of making loans, so underwriting standards are still tight. These higher risks can mean making fewer loans, and loans that are made need to be profitable enough to help cover losses from older loans. As such, while some lenders will lower lending rates quickly in order to help attract new borrowers, some lenders will drift their rates downward more slowly and steadily, preserving wider profit margins. This drifting of rates is one of the reasons that Federal Reserve moves can take anywhere from six months to a year to be fully realized in the economy. It also means that loan rates for automobiles are likely to trend downward only mildly in the months ahead, if at all.
New Auto Loan Averages
Selected Metropolitan Areas
Auto loan pricing varies widely from lender to lender, with differences in rates of two percentage points or more in some areas. We suggest that you shop around for the best your market has to offer, and don't forget to check with your credit union, should you belong to one. The averages listed below apply to a $20,000 fixed-rate loan made to good credit quality borrowers.
Used Auto Loan Averages
Selected Metropolitan Areas
National data, broken out into 36 month, 48 month and 60 month series of averages are available at low cost, including historical information. Please call for more information.
Auto loan pricing varies widely from lender to lender, with differences in rates of two percentage points or more in some areas. We suggest that you shop around for the best your market has to offer, and don't forget to check with your credit union, should you belong to one. The averages listed below apply to a $20,000 fixed-rate loan made to good credit quality borrowers, and are rates which apply to late-model used cars, typically one- to three- years of age.
|New York City, NY||4.62%|
|Los Angeles, CA||6.10%|
|San Francisco, CA||3.86%|
All rates listings and averages are Copyright © 2015 by HSH® Associates. May be copied and distributed, providing that full source credit is left intact and that HSH is notified as to the publication, URL, or other location where our data are published.