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New car loan rates lowest in 9 years

By Annalyn Censky, staff reporter

NEW YORK (CNNMoney) -- There's nothing quite like the smell of a new car, and interest rates are favoring buyers -- well, at least the affluent ones.

A report by Edmunds.com, an auto research site, shows that rates on auto loans are hitting record lows.

The average auto loan for new car purchases carried an interest rate of 4.16% in December -- the lowest level since the automotive research site started tracking data in 2002.

That's almost half the highest rate on record -- which was recorded in January 2006, when demand was high and credit was easier to come by for consumers of all incomes.

December's figures were a unique case, said Ivan Drury, an Edmunds analyst, because the luxury market was the main driver.

"You can only buy a car in December if you're financially well off," he said. Drury explained that holiday presents, travel and other big-ticket costs often keep moderate consumers from the auto dealerships at the end of the year.

Since affluent customers tend to have better credit and get lower interest rates, that skewed the data toward a lower average for the month, Drury said.

Plus, as automakers offered large incentives, many of last month's car buyers paid no interest rates at all.

Buick, a General Motors (GM) brand, offered the most incentives last month. Overall, more than half of the GM brand's financed sales were through no-interest loans.

Toyota (TM) followed close behind, with 40% of its financed sales stemming from no-interest loans, according to Edmunds.com.

Deep incentives likely contributed to strong auto sales at the end of the year. Industrywide, U.S. sales rose 11% in December -- capping the best quarter since the third quarter of 2008, according to sales tracker Autodata. To top of page

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