MIAMI—While relief is likely coming for auto loan borrowers through additional Fed rate cuts, the average interest rate on auto loans rose by as much as 2% between Q2 2024 and Q3 2024, WalletHub reported.
WalletHub has released its new report on the States Where Auto Loan Interest Rates Are Increasing the Most, and North Dakota and Utah are leading the way.
Americans collectively have over $1.6 trillion in auto loan debt, an average of more than $13,000 per household. Nationwide, the average interest rate on loans for new cars is over 8% with commercial banks and over 6% with other finance companies, WalletHub said.
States leading the way on rate hikes:
North Dakota
Residents of North Dakota saw the biggest increase in auto loan interest rates from Q2 2024 to Q3 2024, with the average rising by around 2.3%. That brought the average interest rate overall to 9.4%.
“The good news is that even with the large increase, North Dakota residents pay much less on their auto loans than people in many other states. In fact, their average interest rate in Q3 2024 was the 18th-lowest in the nation. North Dakotans have been borrowing more to buy vehicles, however. In fact, the state ranks sixth among the states where auto loan debt is increasing the most. But despite borrowing more and owing more interest, North Dakota has the seventh-lowest auto loan delinquency rate. Hopefully, that continues,” WalletHub said.
Utah
Utah residents experienced the second-biggest increase in auto loan interest rates from Q2 2024 to Q3 2024. The average interest rate rose by around 2.1%, reaching 8.7%.
“Luckily for Utahans, that’s still the fourth-lowest interest rate in the country. While rates have gone up, Utah residents have been more restrained with their borrowing. In fact, people in Utah are increasing their auto loan debt at a slower rate than people in all but two other states. Unfortunately, though, Utah also has the eighth-most auto loan delinquency. Since residents are already struggling to pay, increased interest rates may exacerbate that issue,” WalletHub said.
Alaska
Alaska residents had to deal with the third-biggest increase in auto loan interest rates from Q2 2024 to Q3 2024, at roughly 1.9%. As a result, the average interest rate rose to 9.1%.
“But the good news is that’s still the 13th-lowest in the country. For more context, the highest interest rate for any state is 12.5%, and the lowest is 8.2%. Alaska is also experiencing the ninth-highest increase in auto loan debt, so increased interest rates combined with higher loan amounts will push the amount of interest owed even higher. That’s bad news when Alaskans already have the second-highest auto loan delinquency in the nation,” WalletHub noted.