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While auto loan rates haven’t reached the heights of the 1980s, they’ve fluctuated quite a bit over the past few decades.
Current Auto Loan Interest Rates Based On Credit Score
Written by: Dash Lewis Written by: Dash Lewis Contributor Dash is a contributor to the executive team covering auto insurance news and trends.
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Edited by: Rashawn Mitchner, Edited by: Rashawn Mitchner Managing Editor Rashawn Mitchner is an executive team editor with over 10 years of experience covering personal finance and insurance topics.
Auto loan rates have fluctuated widely since 1972, when the Federal Reserve began tracking historical data. In this article, we at the management team take a closer look at rate trends by decade based on data collected by the Federal Reserve. We’ll also examine the impact of the COVID-19 pandemic on auto loan interest rates and dive into expert opinions on what we can expect from the Fed next year.
In the early 1990s, the Federal Reserve Bank of St. Louis created the Federal Reserve Economic Data (FRED) database. The goal was to collect and present data to help contextualize the Federal Reserve’s monetary policy. FRED combines data from multiple public, private, national and international sources, offering a range of tools to help users communicate and understand the information collected.
The primary source of information for this article is FRED’s Auto Loan Rate Data page, which provides historical data for various loan terms over a period of time. The most comprehensive set is related to 48-month loans. We’ll also look at loans with maturities of 60 and 72 months, although the Fed has been watching them for much shorter periods.
Average Auto Loan Rates
In 1972 February. The Fed has begun tracking auto loan rates for new cars with 48-month loan terms. Below, we summarize FRED’s results by decade.
When in 1972 February. The first time the Fed started tracking this data, auto loan rates were at 10.2%. Until about 1973 May. they have consistently fluctuated around 10%. During 1973-1975 After the recession, interest rates slowly began to rise as the country dealt with issues such as high inflation, high unemployment and a global stock market crash. Prices peaked at 11.57% in 1974. in November, and it took several years for them to fall back below 11%.
As the United States continued to experience high inflation after the recession, car loan interest rates skyrocketed in the late 1970s.
The 1980s began with auto loan interest rates at all-time highs and in 1981, in November reached a record 17.36%. At the beginning of the 1980s there was a sharp economic recession, and in 1981-1982. the country experienced another recession. Monetary policy was focused on controlling the inflation left over from the 1970s, and the Fed raised interest rates to combat this extremely high inflation, leading to high interest rates on auto loans.
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Until 1982 in November interest rates began to decline and fell 1.39 points from last year to 15.97%. The downward trend continued through most of the 1980s as interest rates fell relatively steadily and in 1987 reached its lowest level in May – 10.23%. Until 1989 May. rates will rise again to 12.44%, but will begin to decline almost immediately.
In 1990 August. Iraq invaded Kuwait, triggering what is now known as the 1990s. oil price shock. A sharp rise in oil prices led to a mild recession in the US, which kept mortgage rates relatively high in the early 1990s.
However, the decline was short-lived. It ended in 1991. in March, and after its conclusion, interest rates on car loans in the United States fell drastically. They decreased from 11.6% in 1991. in February to a low of 7.54% in 1994. February. Although in 1995 they would rise again to 9.78% in May, they never reached 10%. For the rest of the decade, car loan interest rates ranged from 8.31% to 9.44%.
The early 2000s saw another period of decline in new auto loan rates, from 9.64% in 2000 to in November to 6.43% by 2004 May. in 2001 The terrorist attack in New York played a major role in this decline, but interest rates have started to rise steadily again. starting in 2004
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Interest rates continued to rise until 2008. the economy was hit by the Great Recession, which caused a sharp and rapid drop in interest rates on new car loans. At the beginning of the recession, interest rates reached 7.27 percent. – in 2009 May. they had fallen to 6.79 percent.
In 2010 as the economy began to recover, car loan rates continued to decline, falling to 5.87% by November of that year. The highest rates were in 2011. – peaked at 5.89% in August and fell to extremely low levels in the first half of the decade. 2013-2015 there were moments of slight volatility: in 2013 in May, interest rates were 4.13%, and a year later they rose to 4.5%, in 2014 in November it immediately dropped to 4.06%, and in 2015 February. jumped again to 4.53%.
Interest rates on car loans in 2015 reached an all-time low in November – as much as 4%. Until 2019 they rose 1.5% and started to fall when 2020 the beginning of the COVID-19 pandemic.
Auto loan interest rates have been greatly impacted by the COVID-19 pandemic and its impact on the US economy. Prices started relatively low in 2020. continued to decline during the first year of the pandemic. As the world began to recover, interest rates on auto loans jumped and by 2022 in November rose to 6.94%. in 2023 Interest rates stood at 7.46% in February, the most recent data collected by the Fed.
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The Fed only started collecting data on 60-month new car loans in 2006. August, so the information available is not nearly as extensive as for 48-month loans.
Since 2006 until 2009 Auto loan rates have declined relatively steadily from a high of 7.82% in 2006. August. to 6.59% in 2009 in November. The biggest drop occurred since 2007. in November until 2008 in February, when interest rates fell from 7.6% to 7.18%. . During the Great Recession, interest rates settled at around 7%, but began to gradually decline as markets recovered.
In 2010 Interest rates on 60-month auto loans were similar to 48-month rates, falling steadily for the first four years to a low of 4.05% in 2015. in November Interest rates remained fairly steady for the next year before starting to creep up. over the next two years. Since 2016 in November until 2018 in November interest rates rose more than a percentage point from 4.05% to 5.36%. They remained around this level until 2019. of the end, just before the start of the COVID-19 pandemic.
After the Fed cut interest rates in response to the economic impact of the COVID-19 pandemic, auto loan rates began to decline steadily throughout 2020. Although in 2021 and 2022 there was little change at the start, with 60-month rates remaining between 4.52% (Feb 2022) and 5.05% (May 2021). Until 2022 August. interest rates rose to 5.5% and began to rise sharply, and in 2023 February. reached 7.48%.
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When in 2015 August. The Fed started collecting data on 72-month new car loans for the first time, with interest rates at 4.52%. Until 2016 May. they decreased by 0.44 percentage points and reached 4.08%. From there, rates began to rise steadily for most of the rest of the decade and into 2018. reached 5.63% in November. Since then in 2019 they remained between 5 and 5.5%.
Similar to interest rates for all other loan terms, 72-month mortgage rates fell in 2020. and remained low for most of 2021. and 2022 at the beginning Interest rates did not rise above 5% again until 2022. in May, when it reached 5.19%. Since then, they have increased every few months and in 2023. February. reached 6.97%.
According to the Federal Reserve, auto loan interest rates have fallen in 2020 since the start of the COVID-19 pandemic. That’s partly because the Fed cut interest rates drastically to help stabilize the economy during that time. in 2021 and 2022 rates remained low at the start of the year as the country looked to recover from the economic challenges it faced during the ongoing pandemic.
However, in the face of rising inflation in the United States, the Federal Reserve Bank in 2022 took steps to counter it. in 2022 March. began a series of rate hikes that saw the Fed raise interest rates by five percentage points, with the last increase taking place in 2023. May.
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While the pandemic initially lowered interest rates on consumer auto loans, new car prices skyrocketed at the time due to supply chain issues, chip and inventory shortages, and automakers choosing to prioritize higher-margin models. New car prices have remained highly volatile throughout the pandemic.
The prices of new cars have mostly stabilized now, and in 2023 in April their average price is $48,275. While the good news is that normal price increases have slowed in recent years, the current average price of new cars is high. compared to what Americans paid between 2019 and 2022
If you are considering buying a new car,
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