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Auto financing to stay affordable in 2016

Posted on Wednesday, February 17, 2016 at 10:17:22 AM

It is going to be another good year for auto financing. According to U.S. News & World Report, average interest rates in 2015 were about 4.3 percent for new cars and about 5 percent for used ones. This year, the best rates for well-qualified drivers will stay below 4 percent. On average, U.S. News predicted that new car rates would be around 5 percent by the end of the year.

"We've had so many economic fits and starts that have really helped keep rates low and keep them from going up," Greg McBride, chief financial analyst for Bankrate.com, told U.S. News. "I think we've got a similar path ahead. Even though the economy is doing better, I don't expect rates are going to be zooming higher anytime soon. Any increases are going to be gradual and pretty uneven."

Even if financing rates top out at somewhere between 5 and 6 percent as 2016 comes to a close, U.S. News determined that they would still be historically low. Buyers will see little difference between the kinds of vehicles they could afford last year and those within their reach this year.

"Nobody's going to have to downsize from the SUV to the compact because interest rates are going up," McBride said.

Drivers looking to take advantage of lending money to purchase a vehicle should remember that certain factors can prevent them from doing so. Credit.com described how repossession, bankruptcy, incomplete loan documents and a sparse credit history can all be obstacles to getting a loan. 

It's important to remember that honesty is of central importance in the loan process. Lenders understand that borrowers run into credit challenges, and as long as borrowers are forthright about them, lenders like Home Loan Investment Bank will work to get them the best loan possible.