WASHINGTON (2/13/15)--After car manufacturers, credit unions offer the best interest rates on auto loans, according to the findings of a recent report by Washington, D.C.-based WalletHub.

Credit unions offered interest rates 25% below the national average, the report found, while national banks were roughly average and regional banks offered interest rates 40% above average. Manufacturers offered rates 35% below average.

Nearly 160 lenders were polled, including 27 small banks, 47 regional banks, 10 national banks, 52 credit unions and 21 manufacturers.

In 2014, interest rates at credit unions dropped 2.87% to 2.44% for new cars, while banks ended the year with an average of 4.31%. Manufacturers posted the lowest interest rate for new cars at 1.92%.

For used cars, credit union interest rates dropped 1.65% to 2.93%, while banks ended 2014 with an average interest rate of 5.12%.

Additional findings from the report:

• The average new car loan charges 17% less in interest than the average used car loan;
• It costs a consumer four-and-a-half times more to finance a car with fair credit compared with excellent credit, translating to roughly an additional $5,500 in interest paid over the life of a $20,000 five-year loan;
• Consumers with excellent credit experienced the largest drop (18%) in interest rates since the beginning of 2014; and
• If a consumer plans to keep a car for three years or less, 95% of manufacturers will offer a better deal through financing compared with leasing.

WalletHub 2015 Auto Financing Report