There really is no ārangeā rates are supposed to be in. As a matter of fact, historically speaking (for the last 30yrs) interest rates have been dropping. We always see slight upward corrections here and there, but the trend is a downward one.
Interest rate trends for the three most popular types of consumer loansācredit cards, auto loans, and mortgage loansāover the past 25 years.
www.investopedia.com
(cut and paste from this article)
Mortgage Rates
Tracking interest rates over the last 51 years with data provided by Freddie Mac shows that the last decade has had the consistently lowest rates with every single monthly average remaining under 4.5% interest on a 30-year fixed rate mortgage.1
While rates have been climbing from their record breaking average low of 2.68% in December 2021, we are still seeing very low mortgage rates compared to past decades. From 1971 to 2002 rates never dropped below 6% interest and fluctuated between 6.05% to a record high of 18.45% in October 1981. In fact, rates maintained a yearly average above 10% for the entire period from 1979 to 1990.1
Auto Loan Interest Rates
Auto loan interest rates over time have fluctuated more than credit card interest rates, but less than mortgage rates. Data goes back to 1998 on 48-month new car interest rates. They have fluctuated from an all time high of 9.64% in the fourth quarter of 2000 to an all time low of 4.00% in the fourth quarter of 2015. Rates have remained between 4.00% and 5.5% interest for the entirety of the last decade.
The Bottom Line
While interest rates on mortgages and auto loans are climbing, they are still historically low when considering data from the last 51 years. Credit card interest rates have remained dramatically higher over time relative to other loan types, largely due to the
unsecured and transactional nature of that type of revolving loan product.
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We break down statistics regarding average auto loan rates in America, carving the data up term length, credit scores and other facts. We also analyze how these auto loan rates changed over time.
www.valuepenguin.com
Historical Auto Loan Rates
Auto loan rates are at historically low levels as a result of an overall low interest rate environment. Over the last decade, the average interest rate on a 48 month auto loan from a commercial bank has fallen by over 40%. This is largely a result of the 2009 financial crisis, after which interest rates were lowered to incentivize consumers to stimulate the economy by spending on items like cars rather than saving.
Loans from auto finance companies have historically carried lower rates than loans from commercial banks. The large car manufacturers have "captive finance" arms (e.g. Ford Finance, Chrysler Capital, GM Financial) that exclusively provide loans for consumers purchasing the parent companyās cars; this enables automakers to provide lower rates, as the car purchase, rather than the interest, is the manufacturerās primary revenue stream.
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I believe when I used the word "range" it was to describe a generation of people who think that auto loans are "supposed to be under a certain percentage number". Interest rates are not going to stay where they have been, was my point, they have been historically VERY VERY low for long enough for someone who is 30 to only remember them being this low.
Has me thinking, whatās the price forecast over the next 2-5 years? Are people buying now overpaying once the market cools down?
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