Car Loan Rates Rising. What Doe This Mean for Car Finance?
The record low interest rates that have undergirded many large asset purchases over the past ten years may be ending! The Reserve Bank raised the base interest rate in 2017 – three separate times. All signs point to the Fed raising that rate again in 2018, and possibly more than once.
The average 60 month loan will likely rise somewhere in the range of 0.10 to 0.20 percent,if you are to believe the stats that come from the Statista website. This spike in interest rates could force some would be car buyers to extend their loan period out a year or even longer.
If car dealerships see more people stretching out their Stratton Finance Car Loan periods, this is a sign to raise prices. If the monthly payments are lower, they believe they can sneak in a higher price overall. This will affect you no matter the length of time that you choose to take out a loan. There will be other aspects of financing that you need to look out for in the very near future.
First of all, no one knows how much the RBA will raise the total rate once everything is said and done. Some estimates put the total rise in the interest rate at a full base point, which would add thousands of dollars to a loan over its full life. You can also expect the rate on credit cards to move up immediately once the rate is raised by the RBA. This would definitely affect your buying power if you plan on putting any of the financing for your car on a credit card.
The tax legislation that was recently signed into law may also affect interest rates negatively over the meddle term. Although many people are expected to have more money this year, that extra money in the economy could serve as the very catalyst that the Fed needs to raise the interest rate. This would mean a net loss over the life of the average car loan. The longer that the loan was out, the more money that a buyer would lose.
Overall, you should look to shorten the length of your Mazda Finance at Stratton as much as possible. The writing seems to be on the wall when it comes to the record low interest rates that we have been seeing over the past decade. It is time to shore up finances and come up with as big of a down payment as possible if you are looking for a car in the next few years.