Rates to remain low on auto loans
Interest rates were held low in 2013 because of the sluggish economy. But 2014 should bring some economic improvements, which could mean interest rates will tick higher.
Still, it's not expected to be a huge movement upward.
“Automobile loan rates will be pretty low, at least through the end of 2014.”
-- Mike Schenk, Credit Union National Association
Auto loan borrowers should enjoy another year, or even two, of very low interest rates on new and used car loans. "The slow improvements in the labor market should keep the fed fund rate right at about where it is today,” says Mike Schenk, vice president of economics and statistics for the Credit Union National Association, the Madison, Wis.-based industry trade group. "What that says to us is automobile loan rates will be pretty low at least through the end of 2014."
According to Bankrate's McBride, interest rates on auto loans should stay at very attractive levels throughout 2014, with new car-loan rates in the low 4 percent range and used car rates below 5 percent for much of the year. Rates could move to the higher end in the latter half of the year as the economy strengthens and the Fed continues to pull back on its long-term debt purchasing program.
"It's still a low-rate environment, and even if the Federal Reserve is tapering off their long-term debt purchases, they're pledging to keep short-term interest rates on hold -- all of which is helping keep auto loan rates low," McBride says.
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