The average car loan rate of 6.21 percent last week was the lowest average auto loan rate in more than two decades of tracking by Bankrate.com, USA Today reports. Bankrate.com, a financial rate information website, surveys major banks nationwide every week and releases the average auto loan rates every Thursday.
The average 6.21 percent car loan rate is for a four-year new vehicle loan. Bankrate.com’s survey data also found the average auto loan rate for a five-year new car loan was 6.26 percent last week.
New vehicles like the 2011 Kia Sportage, are being offered with low or 0 percent auto loan rates to shoppers with good credit.
Greg McBride, senior financial analyst for Bankrate.com, told USA Today that a few lenders are offering car loan rates as low as 2.99 percent right now.
Bankrate.com’s findings were released the same week that Edmunds.com also revealed data showing that auto loan rates hit a record low recently. Edmunds.com found that the average car loan had an interest rate of 4.16 percent in December 2010, which is down 0.33 points from November and 0.55 points from December 2009. About 15.4 percent of all auto loans in December had 0 percent rates.
Only 4 percent of all auto loans in December had a car loan rate more than 10 percent, which Edmunds.com says is the lowest proportion it has seen since it started gathering data in this category in 2004.
USA Today reports that there are several factors causing auto loan rates to hit record lows right now, including lender competition, manufacturer incentives and a lender focus on consumers with good credit scores.
Bankrate.com’s McBride says some of the lowest auto loan rates are being offered by large national or regional banks. Manufacturers are also offering more 0 percent car loan rate incentives, low auto loan rates and discounted lease deals, which are helping shoppers with good credit take advantage of the auto finance discounts.
Remember to apply at your bank or credit union before you go to the dealership to see if the dealer’s lenders can beat the auto loan rate you’ve been pre-approved for. This guarantees that you’ll get the best car loan rate on your new vehicle purchase.