Spring is here, and the U.S. economy is very slowly beginning to move in the right direction. Interest rates in most areas of lending are likely to continue bumping along historic lows throughout the rest of 2021. For lenders, these low rates will be key to bringing in the loans of those considering buying a new, or new-to-them, vehicle now.

According to Bankrate’s 2021 interest rate forecast, rates for new and used car loans in 2020 declined nearly in lockstep. This trend is expected to continue in 2021, but the drop in rates will occur more slowly over time than it did last year. Average interest rates for new and used car loans are forecast at around 4.75% for used car loans and 4.08% for new car loans.

One contributing factor that’s keeping interest rates low are the actions of the Federal Reserve. Their plan is to keep borrowing costs pinned at zero until at least 2023, according to the auto loan rate forecast from Bankrate. The expected outcome is that keeping rates and borrowing cost down, more people will be able to borrow, which in turn will help the overall economic recovery.

Yet Americans’ financial situations are not nearly as stable as they were before the pandemic started, so consumers are more likely to favor used cars as they are less expensive than a new one. Even those looking to buy a new car may still encounter stock shortages due to a combination of manufacturing catching up after the initial slowdowns and shortages in the supply chain. Don’t expect a significant increase in new car sales until later in 2021 at the earliest.

As interest rates remain low, you can be ready to say ‘yes’ to more new and used car applications your credit union already has with help from Open Lending’s Lenders Protection™! Our Lenders Protection™ program utilizes advanced decisioning analytics and proprietary data to allow you to be able to take on more loans without greatly increasing the risk to your loan portfolio.

To learn more about the Lenders Protection™ program from Open Lending, contact one of our knowledgeable account executives today!