How To Save Money On Auto Loans After A Fed Rate Hike Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
Don Mason/Getty Images November 02, 2022 Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Americans have been met with price increases at the supermarket, gas pump and dealer lots over the past year. As the Federal Reserve works to quell the inflation incurred from the pandemic there will be some growing pains hitting all facets of borrowing — auto loans included — while the Central Bank helps the economy return to normal. The September Fed meeting brought a steep change moving the federal funds rate to 3-3.25 percent. And November’s meeting brought forward similar intent, all with the focus on controlling inflation by raising the benchmark rate for the sixth straight meeting, now set at 3.75-4 percent. Lightbulb How the Fed affects auto loans The sets the benchmark rate, which is what auto lenders base their rates on. How to save money regardless of the rate hike
The key to saving money is preparedness. So, while vehicle prices remain high and the cost to borrow money increases, there are still ways to get ahead and save money. Apply for loan preapproval
By applying for you can lock down your expected monthly cost prior to signing off on your vehicle. It gives you a firm grasp on the of your new car and gives you a leg up when it comes to negotiation. You can also use the preapproved rate when comparing other loan options. Consider a trade-in
your current vehicle is a great way to drive off with a new car while spending less cash on a down payment. It will also save you the headaches of selling your car privately. Shop around
It is recommended that you at least three different loan offers when looking for vehicle financing. Do not sign off on the first deal you come across, and understand the cost differentiation that comes with versus that found from other lenders. Only buy what you can afford
As with anything when it comes to large purchases it’s important to ahead of time to ensure that you only sign off on a vehicle that you can afford. This way you can ensure you can keep up with your monthly payments and be prepared for even the worst-case scenario. Buy electric
While tend to carry a higher purchase price tag, they can be much less expensive over the lifetime of ownership. Check out special offered in your state as well as to save money on an eco-friendly vehicle. The results of the November 2022 Fed meeting
The buzz around the November Fed meeting focused on managing inflation. Sarah Foster, senior U.S. economy reporter at Bankrate, explains that “The Fed is fast-tracking its hikes to borrowing costs as consumers feel the biggest inflationary hit to their purchasing power in 40 years.” With the benchmark rate now set at a range of 3.75-4 percent, this inflationary hit is going to hit consumers in ways that Americans have not had to deal with since the early ’90s. “Policymakers haven’t hiked interest rates by more than the standard quarter-point multiple times in one year since 1994,” says Foster. “And when it’s all said and done, the Fed could end up hiking rates this year by the most since the ’80s. All of that means, Fed policy won’t be remembered this year by how many rate hikes — but by how many percentage points rates rise.” High inflation rates add pressure to an already tight market. The increased benchmark rate is only a single factor in why buying a car is so expensive right now. “Higher auto loan rates are just an added tax on top of already-high price pressures and supply chain bottlenecks that have sent the price of both new and used cars soaring,” Foster says. But Foster does present some encouragement. “As with all corners of personal finance, securing the best deal possible on your car loan comes down to shopping around for both the right car and loan, as well as keeping your as strong as possible.” Current state of the car buying market
Drivers looking to purchase vehicles right now have to deal with high prices and sparse vehicle inventory. Kelley Blue Book reported that new vehicle costs surpassed $48,000 in August 2022, hitting a fifth straight month of record-high prices. Drivers financing used cars paid $515 and those financing new ones paid close to $667 each month, . The cost to was also up 11.1 percent Rising inflation is only one factor that has led to increased vehicle costs. The vehicle industry is still working to catch up with the profound impacts brought on by the microchip shortage and widespread inventory issues. Fortunately, indicators do show that vehicle production should return to pre-pandemic levels soon. Waiting to could be worth your while. On top of this, drivers are dealing with much more than just expensive vehicles. According to AAA, gas prices have reached record high prices, even surpassing $5 per gallon as recently as June 14 – up nearly 50 percent in the past year. Unfortunately, the timeline for gas prices returning to normal is mostly unknown due to how much of it is affected by the Russia-Ukraine war. This all culminates in an especially challenging time for the multitude of Americans that do not have the luxury of waiting for inflation to subside before making a vehicle purchase as vital to their life as transportation, explains Foster. The bottom line
While it’s true that a steep benchmark rate will tangentially impact your available rates, it is not all bad news. As the FOMC works to control inflation there are still ways to save money at the and when financing your vehicle. Stay up to date on current Federal Reserve , available loan rates and understand how future changes can impact you and your budget. Ultimately, patience is the best option — if you can hold out. SHARE: Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. Related Articles