Auto Loan Rate History (1972-2026): 48-Month New Car APR

The Federal Reserve G.19 release began publishing the 48-month new-car loan APR at commercial banks in February 1972 (FRED TERMCBAUTO48NS). The first readings sat near 10% - the 1972 quarterly average was about 10.05% per G.19. Through the decade the rate drifted up with inflation, reaching 12.02% in 1979 per FRED. The structural break came in August 1979 when Paul Volcker took over the Fed and shifted policy toward crushing inflation expectations.

The annual average hit 16.54% in 1981 and 16.83% in 1982, the highest in the series per FRED TERMCBAUTO48NS. The single highest monthly reading was 17.36% in November 1981. The federal funds rate averaged 16.38% in 1981 (FRED FEDFUNDS), so the gap between the auto rate and the policy rate nearly vanished - it compressed to about 0.16 percentage points, the tightest spread in the entire series. New-vehicle sales fell hard as financing costs doubled from the early-1970s baseline.

Before 1986, interest paid on a car loan was deductible like any other consumer interest. The Tax Reform Act of 1986 phased that out (fully gone by 1991), which raised the effective after-tax cost of financing a car even when the headline APR did not move. The 48-month APR itself kept falling through the late 1980s as disinflation took hold - 11.33% in 1986 down toward 10.45% in 1987 per G.19 - but the after-tax math for borrowers got worse. This is why the mortgage-interest deduction, which survived 1986, still matters and car-loan interest does not.

After 9/11, automakers used 0% APR promotional financing aggressively to keep showrooms moving, and it became a permanent fixture of new-car marketing. The G.19 commercial-bank series does not capture captive-lender promo rates, so the published bank APR (8.50% in 2001, falling to 6.60% by 2004 per FRED) understates how cheap subsidized manufacturer financing actually was for qualified buyers. The headline bank rate and the advertised dealer rate diverged structurally from this point on.

The Fed cut the federal funds rate to near zero in December 2008 and held it there for seven years (FEDFUNDS averaged 0.09% to 0.18% from 2009 through 2015). The auto rate fell more slowly and bottomed at 4.19% in 2015 per FRED TERMCBAUTO48NS - the lowest annual average in the series. Note the gap: with the policy rate near zero, the auto-loan spread blew out to roughly 5 percentage points (it averaged 5.07 pp across 2009-2015 and peaked at 6.56 pp in 2009). Auto credit carries default risk that Treasury-driven mortgage rates do not, so it never compressed to the floor.

This is where auto loans behaved differently from mortgages. The Fed cut to zero again in March 2020, and 30-year mortgage rates set an all-time low of 2.96% in 2021 (Freddie Mac PMMS). The 48-month auto APR, by contrast, barely moved - 5.09% in 2020 and 5.05% in 2021 per FRED, well above the 4.19% it had already reached in 2015. The reason is the credit-risk spread: auto lenders priced in pandemic uncertainty about employment and used-car values, so the policy-rate cut did not pass through the way it did for government-backed mortgage debt.

The Fed began raising rates in March 2022 to fight roughly 9% CPI inflation. The 48-month auto APR jumped from 5.62% in 2022 to 7.97% in 2023 and 8.49% in 2024 per FRED TERMCBAUTO48NS - the highest since the early 1990s. As policy rates eased in 2025 the annual average slipped to 7.60%, and the latest monthly reading (February 2026) was 7.36% per FRED. The current rate sits below the long-run series mean of about 8.85% but well above the 2013-2021 trough.