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Car Loan Lending Rates at 8-Year High
The average interest rate on a new-car loan in the U.S. climbed to an eight-year-high of 5.2% from 4.9% a year ago.
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The average interest rate on a new-car loan in the U.S. climbed to an eight-year-high of 5.2% from 4.9% a year ago, according to online data service Edmunds.com.
Edmunds attributes the increase to the impact of three Federal Reserve interest rate hikes last year. The adjustments boosted the central bank’s benchmark overnight lending rate by 0.75 points to 1.5%.
About 22% of borrowers are still getting subsidized loans at rates of 0% to 2%. But Edmunds calculates that most loans are now being written at 4%-5% compared with a 3% over the past few years. And the ratio of loans at rates above 7% has grown to 19% from 18% a year ago.
Rising loan rates are boosting interest in leasing, which has accounted for about 29% of U.S. retail sales over the past year. Last month leases surged to a record 33.5% of the market. Edmunds tells Automotive News it expects the ratio will fall back to about 30% for at least the next several months.
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