The Best States for Auto Loans

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Looking to get a good rate on an auto loan? Go west, young man.

Last month, our sister site TheStreet reported on a new trend of car buyers traveling hundreds of miles to take over the leases of other lessees, all in the hopes of avoiding the cost of having the car delivered.

Well, that’s not the only benefit of traveling across state lines to get a car. Using extensive RateWatch data from across the country, we looked at the average interest rates charged to auto-loan seekers, and found significant variance. We gathered rate data from every bank and branch in each state; the rates assume the borrower has great credit and is not currently a customer of the bank. The three lowest state averages were all out west, with Alaska taking the top spot. Here are the top 10 performers, the states that offer consumers the best deals on auto loans.

State                      Rate

1. Alaska                 3.821
2. Arizona                4.312
3. Nevada                4.427
4. New York             4.441
5. Ohio                     4.554
6. Utah                     4.596
7. Rhode Island        4.641
8. Indiana                 4.667
9. Washington, D.C.  4.672
10. Delaware             4.747

Now, if you aren’t already living in the Last Frontier, chances are you aren’t going to trek to Alaska just to get a few lousy points on your auto loan (especially when you consider that many of the towns there are only accessible by plane or boat). But others in the top 10 may be a bit closer to home.

Checking in at number two is the great state of Arizona. With an average rate of 4.312%, you could head across the Four Corners from Colorado (average rate: 5.654%) and potentially save about $750 over the course of the loan on a $25,000 new car. That might not seem like major savings to everyone, but in the Great Recession, every bit counts.

Number three is another southwestern state, Nevada, where you’ll get charged an average of 4.427% on a 48-month loan. If you’re in neighboring Idaho (5.474%), you can drive over the border and save some money over the life of the lease, then blow all that money in Vegas while you’re there.

On the East Coast? New York made the top five, with some solid rates in New York City from Chase and Bank of America.

So why is there so much variation between states?  It generally has more to do with shifting market forces than inherent differences between states, says Bill Visnic, senior editor at automotive site Edmunds.com. “It’s very fluid and market-driven,” he explains, noting that large banks can quickly cause a big shift in local markets. “Bank of America, for instance, might decide in some quarter that they didn’t like their numbers from the Chicago market, and say, ‘Hey, let’s go after that.’” Indeed, a glance at the state-by-state averages from March shows a very different picture, with New York taking the top spot and Alaska falling all the way to 13th on the list with a 5.504% average. Obviously, conditions on the ground can change very quickly.

The moral of the story, then, is that the best strategy is to shop around – check rates at the banks in your area with the BankingMyWay search tool, powered by RateWatch data. But as you shop, don’t be afraid to look across state lines. Depending on where you live, the grass may be greener on the other side of the border.

 

State-by-State Averages, 48-Month New Auto Loan

State    Rate

AK        3.821
AZ        4.312
NV        4.427
NY        4.441
OH       4.554
UT        4.596
RI        4.641
IN        4.667
DC       4.672
DE       4.747
CA       4.756
WA      4.782
MA       4.793
KY        4.913
MI        4.919
MD       4.920
NM       4.988
HI        5.000
IL         5.017
NJ        5.034
OR        5.105
GA        5.109
NW       5.113
OK        5.206
KS        5.243
WV       5.244
MO       5.247
TN        5.336
SC        5.356
LA        5.386
TX        5.392
ND       5.416
ME       5.431
ID        5.474
MS       5.482
MT       5.502
WY      5.519
NC       5.546
AL       5.601
CO      5.654
WI      5.673
IA        5.687
VA       5.750
FL        5.779
PA       5.882
NH       5.982
AR       6.004
NE       6.013
VT       6.151
SD       6.160
MN       6.258
CT        8.217

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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