Will car loan rates increase in 2022?
After a turbulent year that ended with serious concerns about rising inflation, Reuters reports that the Federal Reserve today signaled that it would pave the way for interest rate hikes of three-quarters of a percentage point in 2022. However, this may not translate to significantly higher 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 car 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 attractive from a historical perspective.
We’re inclined to agree, though manufacturers might react in different ways. For example, a shortage of chips has led to a reduction in incentives such as rebates and APR offers. Right now, year-end car deals are rare, with significant limitations on 0% APR deals, such as reduced terms involving 36-month loans.
New car buyers in 2022 could face a triple price increase. First, there’s the prospect of paying a higher price at dealerships due to a shortage of inventory that’s expected to last well into next year. Then there is the likelihood of having fewer incentives. Finally, the possibility of an increase in interest rates could be a source of concern.
When it comes to factory car incentives, there might be reason for optimism. For example, just last month, Chrysler was offering 0% financing for up to 84 months on select models. Even GM is offering interest-free loans for 72 months, and a growing number of automakers are paying their customers to wait.
Depending on how things go, there might still be offers if you know where to look. CarsDirect’s team of experts reviews the latest offers from all the major car manufacturers and will be on the lookout for incentives that can save consumers money, whether they are considering buying or leasing a car at the approach of the new year.
Sources: Reuters, Cox Automotive
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