The average interest rate credit unions charged on new auto loans decreased
from 5.62 percent in Dec. of 2003 to 5.47 percent in the third quarter of 2004.
This number is based on the most common interest rate of the 5,763 credit unions
reporting on their 5300 Call Report for new auto loans. This decline can partly
be attributed to the low interest rate environment that credit unions have experienced
over the past few years. However, sluggish new auto sales and alternative financing
options from other institutions have also influenced the drop in rates.
With dealers and financing companies offering cash rebates, 0 percent APR financing
and other incentives to entice consumers, credit unions have used low interest
rates as one tactic in encouraging members to finance new automobile purchase
through them. Efforts like these have resulted in credit unions increasing their
new auto loans by $8.7 billion over the past year to $81.7 billion outstanding.
The following graph displays the average interest rate for new and used auto
loans and all loans for the 5,763 credit unions that reported their most common
new auto loan interest rate.