Will Auto Loan Rates Increase in 2022?
After a difficult year that ended with serious concerns about rising inflation, Reuters reports that the Federal Reserve announced today that it will set the stage for interest rate hikes of three-quarters of a percentage point in 2022. However, that might not translate into much more interest rates high for buyers looking to take out a car loan.
In a report released today, Cox Automotive estimates that “consumers are likely to see auto loan rates rise by at least a third of a point to potentially three quarters of a point by the end of next year.” While this may sound alarming to some, the company notes that auto loan rates would remain historically attractive.
We’re inclined to agree, although manufacturers may respond in different ways. For example, a shortage of chips has resulted in reduced incentives such as discounts and APR offers. At present, year-end car deals are scarce, with significant limitations on 0% APR offers, such as reduced terms involving 36-month loans.
New car buyers in 2022 could face a triple price hike. First, there is the possibility of paying a higher price at dealerships due to an inventory shortage that is expected to last until next year. Then there is the likelihood of fewer incentives. Finally, the possibility of higher interest rates could be of concern.
When it comes to the incentives for factory cars, there might be some reason for optimism. For example, just last month, Chrysler offered 0% financing for up to 84 months on select models. Even GM offers interest-free loans for 72 months and a growing number of manufacturers are paying their customers to wait.
Depending on how things go, there could always be some deals if you know where to look. CarsDirect’s team of experts reviews the latest offerings from all of the major automakers and will be looking for incentives that can save consumers money, whether they are considering buying or leasing a car at home. approaching the new year.
Sources: Reuters, Cox Automotive
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