Auto loan interest rates at banks will rise this year, pushed by the Federal Reserve's expected rate increases. But heightened competition among auto lenders will mitigate banks' rate hikes, according to Bankrate.com.
At the end of last year, the average interest rate on a five-year new-vehicle loan on Bankrate.com was 4.43 percent. At the end of this year, Greg McBride, chief financial analyst at Bankrate.com, predicts that the average rate will be 4.85 percent. Five years is the most common new-vehicle finance term on Bankrate.com.
On the used-vehicle side, four years is the most common finance term on Bankrate.com. At the end of last year, the average interest rate on a four-year used-vehicle loan was 4.99 percent. At the end of this year, McBride expects the rate to be 5.35 percent.