According to the Federal Reserve, the average interest rate for a four-year car loan from a commercial bank was 5.87 percent in November 2010. At the big auto finance companies, that average interest rate was 4.63 percent. Borrowers typically financed about $27,000.
Brief History of Auto Finance
Rates at the auto finance companies fell considerably during the U.S. financial crisis in 2008 and 2009. In the fourth quarter of 2009, rates stood at 3.47 percent. That was a pretty marked decline. In 2005, rates averaged about 6 percent. They fell fairly quickly to 4.99 percent in 2006.
Bank Rates
Rates at commercial banks have traditionally been higher than those at auto finance companies. When rates were at their lowest at the auto finance companies, commercial banks lent at an average of 6.55 percent. That's more than 3 percentage points higher.
By City
According to HSH Associates, a firm that compiles mortgage and lending data, average rates in the U.S. vary according to the city. For a $20,000 loan made to a borrower with good credit in December 2010, the average rate in Los Angeles was 6.9 percent. In Cleveland, it was 4.7 percent. Other cities hovered between the two.
Your Credit Score
Averages are computed by combining the high rates and the low rates. Not everyone gets the typical rates, or even a good rate. The rate you receive may be based on your credit score. You should shop around to find not only the best rate, but the best deal on credit. A high interest rate with a shorter term may mean that you end up paying more per month, but with a shorter number of months. A lower interest rate offered over more than five years may end up costing more money in the long run. Examine the truth-in-lending statement your lender offers to determine the true cost of credit.
0 comments:
Post a Comment