Interest rates on auto loan rates downshifted some in 2014, driven by intense competition, but borrowers shouldn't expect the same in 2015. Rates for new and used cars should move higher, although the pace is expected to be slow and moderate.
"You will still see plenty of sub-4 percent offers through the new year," says Bankrate's McBride. The interest rate hike won't be big enough "to detract from what is expected to be another year of strong car sales."
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McBride says the average interest rate on a 60-month new car loan by the end of 2015 will be 4.35 percent, while borrowers will pay an average of 5.4 percent on a 48-month used car loan. That compares with 4.06 percent and 4.99 percent, respectively, in 2014.
"On a $25,000 car loan, it's about $6 a month more," McBride says.
While fears have reverberated throughout the market that the Fed will hike interest rates in 2015, some experts don't think it will happen. With the economy on the mend and the job market stabilizing, the Fed won't make any drastic moves to wreck those improvements, says Eric Lyman, vice president of ALG, a Santa Barbara, California, automobile industry research company.
"Looking at what the Fed communicated, it agreed to hold the line on interest rates until they see a broader economic recovery," he says.