Auto loan rate averages have reached their lowest point in over two decades of tracking, according to USA Today. The article looked at the latest car loan rates and determined the lows we are seeing may signal that this is a good time to get out and buy.
6.21 Percent Rate Near Record Low
The average auto loan rate for a 48-month term was 6.21 percent. This, according to USA Today, is the lowest average in more than two decades of tracking. Of course, this number is only an average, which means you could easily find lower rates if you shop around. Some have fallen to as low as 2.95 percent.
One reason rates are lower than normal is because the economy is in a much different state than it was when rates were at their peak. For instance, in 2006, average rates reached 8 percent. However, the economy was in a better state, demand for vehicles was much higher and lending criteria was more lenient.
Because the economy is in a tougher position and demand is lower, rates are expected to remain on the lower end of the spectrum for a while.
Is Now the Time to Buy a Car?
Since rates are lower than they have been in a very long time, you may feel ready to go out and purchase a vehicle. Before you take this step, however, here are some questions you should first consider:
- Are you financially ready to buy a car? Before going out and putting a down payment on a vehicle, look at your budget and determine whether you are prepared to place the down payment as well as pay the monthly car note, insurance, sales tax and other vehicle financing costs that come along with a car purchase.
- What can you afford? You need to know the amount of the loan you can actually afford before hitting a dealer lot. One good way to find out is buy using an auto loan calculator.
- Should you buy or lease? After looking at the total cost of purchasing a car, you may decide that you want to lease instead. It’s good to know the real difference between buying and leasing before making a decision.
There’s plenty to know and consider before committing to a car loan, so take time to research as much as possible before taking on this major purchase.
