Bank interest rates will grow to 6.9 percent on direct 60-month new-vehicle loans and 7.8 percent on direct 48-month used-vehicle loans over the course of the year, Bankrate chief financial analyst Greg McBride predicts.
McBride's projections this month give dealership staff seeking to match customers with indirect auto loans from partner lenders a sense of the APR competition they'll face if those consumers already secured direct financing from banks. The average new-vehicle interest rate from a dealership loan reached 6.5 percent in the fourth quarter, while the average used-vehicle dealership APR reached 10 percent, according to Edmunds.
Five-year new-vehicle loans directly from banks started last year at 3.9 percent interest Jan. 5, 2022, and rose to 6.1 percent by Dec. 28, 2022, according to Bankrate. APRs on four-year used-vehicle bank loans climbed to 6.8 percent from 4.4 percent during the same time, Bankrate said.
McBride's new- and used-vehicle estimates involve far shorter terms than the roughly 70-month industry averages. However, he told Automotive News interest rates on longer-term finance contracts should follow a similar pattern as the four- and five-year loans he examined.