Open navigation Main Menu Mortgages

Financing a home purchase refinancing your existing loan Finding the best lender Additional Resources

Looking for a financial advisor? Do our 3-minute quiz and then match up the advisor you want today.

Main Menu Banking

Compare Accounts Use Calculators Get advice Bank reviews

Looking for a financial advisor? Do our 3-minute quiz and then match up the advisor you want today.

Main Menu Credit cards

Compare with other categories Compare with credit requirements Compare with issuers Get advice

Are you looking for the ideal credit card? Narrow your search with CardMatch(tm)

Main Menu Loans

Personal Loans Student Loans Calculators for Loans, Auto Loans

Find an individual loan in 2 minutes or less. You can also answer a few questions to get offers–with no effect on the credit rating.

Main Menu for Investing

The Best Brokerages as well as robo-advisors Learn the basics Additional resources

Looking for a financial advisor? Try our three minute test and connect with an advisor today.

Main Menu Home equity

Find the most competitive rates Lender reviews. Use calculators. Knowledge base

Looking for a financial advisor? Do our 3-minute quiz and then match up with an advisor today.

Main Menu Real estate

Home selling or buying a home Finding the right agent Additional sources

Looking for a financial advisor? Do our 3-minute quiz and match with an advisor today.

Main Menu Insurance

Car Insurance Homeowners insurance Other insurance reviews of the company

Looking for a financial advisor? Try our three minute test and connect the advisor you want today.

Main Menu Retirement

Retirement accounts and retirement plans Find out the basics about retirement calculators Additional resources

Looking for a financial advisor? Take our 3 minute quiz and then match up to an adviser today.

Search open Close search


How steep interest rates have negated steadying car prices Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with interactive tools and financial calculators, publishing original and objective content. This allows you to conduct research and to compare information at no cost to help you make financial decisions with confidence. Bankrate has agreements with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site are from companies that compensate us. This compensation can affect the way and where products appear on the site, such as, for example, the order in which they may appear in the listing categories and other categories, unless prohibited by law. Our loan products, such as mortgages and home equity, and other home lending products. This compensation, however, does affect the content we publish or the reviews you see on this site. We do not cover the entire universe of businesses or financial offerings that could be open to you.


The Page On This Page on This Page

Prev Next

10’000 Hours/Getty Images

5 min read Published March 22, 2023

Written by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the details of using loans to buy an automobile.

Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain confidence to take control of their finances through providing clear, well-researched information that breaks down complicated subjects into bite-sized pieces.

The Bankrate promise

More details

At Bankrate we aim to help you make better financial choices. While we adhere to strict ethical standards ,

this post may contain references to products from our partners. Here’s how we make money .

The Bankrate promise

Established in 1976, Bankrate has a proven track history of helping people make smart financial choices.

We’ve maintained our reputation for more than 40 years by simplifying the process of financial decision-making

process and giving people confidence about what actions to take next. Bankrate follows a strict ,

You can rest assured that we’re putting your interests first. All of our content was authored in the hands of and edited by

We make sure that everything we publish is objective, accurate and reliable. We have a team of loans journalists and editors focus on the points consumers care about most — the different types of lending options and the most competitive rates, the most reliable lenders, the best ways to repay debt, and many more, so you’ll be able to feel secure when investing your money.

Editorial integrity

Bankrate has a strict policy standard of conduct, which means you can be confident that we’ll put your needs first. Our award-winning editors and journalists create honest and accurate content that will assist you in making the right financial choices. The key principles We value your trust. Our mission is to provide our readers with truthful and impartial information, and we have established editorial standards to ensure that is the case. Our reporters and editors thoroughly fact-check editorial content to ensure that the information you’re reading is true. We keep a barrier with our advertising partners and the editorial team. Our editorial team doesn’t receive direct compensation through our sponsors. Editorial Independence Bankrate’s editorial staff writes in the name of YOU – the reader. Our aim is to provide you the most accurate advice to aid you in making informed personal finance decisions. We follow strict guidelines to ensure that our editorial content isn’t affected by advertisements. Our editorial team is not paid directly from advertisers, and our content is thoroughly checked for accuracy to ensure its truthfulness. Therefore, whether you’re reading an article or review, you can trust that you’re getting reliable and dependable information.

How do we earn money?

There are money-related questions. Bankrate has answers. Our experts have been helping you manage your money for over four decades. We strive to continuously provide consumers with the expert advice and tools needed to make it through life’s financial journey. Bankrate adheres to a strict code of conduct policy, which means you can be confident that our content is honest and accurate. Our award-winning editors and journalists create honest and accurate content to help you make the right financial choices. The content created by our editorial team is accurate, truthful, and not influenced from our advertising. We’re honest about the ways we’re capable of bringing high-quality content, competitive rates and useful tools for you , by describing how we make money. is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products andservices or when you click on certain hyperlinks on our website. So, this compensation can influence the manner, place and when products appear within listing categories, except where prohibited by law. We also offer loan products, such as mortgages and home equity and other home lending products. Other elements, such as our own rules for our website and whether or not a product is available in the area you reside in or is within your personal credit score may also influence the manner in which products appear on this website. Although we try to offer an array of offers, Bankrate does not include details about each financial or credit item or service.

The last two years of car prices have been a rollercoaster ride for both drivers and sellers. This summer saw record-high transaction prices and an MSRP over $48,000 according to Kelley Blue Book (KBB) and followed suit. Thankfully, car prices have been settling down during the holiday season, following peak prices this summer. But — simultaneously — interest rates have been increasing. The synchronized increase in rates and decrease in cost has hampered any tangible wins for consumers. Rates of interest for new cars increased in October to 4.2 percent just one year ago, according to Edmunds information. This has compounded into a frustrating circumstance for drivers finally feeling some relief on sticker price. As the possibility of a recession looms, it is important to understand how can affect the monthly cost of owning a vehicle. Monthly payments are increasing by 3percent. A person’s monthly payment is based on a number of elements, such as the car and loan term. However, it is also dependent on the benchmark rate set by the Federal Reserve, which auto lenders utilize to . As the Fed rate has increasedwhich is currently set at 4.75-5 percent — over the past year, the cost to borrow money has also increased. The result is that lenders have increased the cost to finance. The more you spend to finance, the greater the interest rates, and the higher the monthly cost is. October set a record in the monthly average of new car payments costing $748 according to KBB. Although prices have dropped by nearly 5 percent and monthly payments have increased by 3.3 percent, according to the CoPilot study. While this percent increase may appear small, it adds up to over 1000 dollars over the course of . This was a disastrous outcome for those who were getting relief from falling costs for vehicles. Any savings could end up being wiped out with the rise in interest rates. Even if prices for car transactions are lower however, they will be much more — which makes it difficult for drivers to save in the first place. Lower wholesale prices have not been translated into retail prices. Logic says that if wholesale prices are lower, then the price that the consumer pays should follow However it’s not the situation. Since the beginning of the year wholesale prices have decreased by over 15 percent. But the average cost of transactions for cars is higher. This is primarily due to the continued demand for new vehicles. October saw the highest volume of new-vehicle inventory since May of 2021. However, just because these vehicles are available more readily does not mean that people can afford the cost of buying them. For many, the cost to buy right now is not worth the cost. As mentioned, October set record-breaking monthly payments of nearly $750, according KBB. Also, even though the automobile inventory rose, it remains low by historical standards. The limited supply of vehicles results in continued high prices for the retail market. A rise in credit union auto loans Another reaction to rising interest rates has driven certain borrowers to take out loans using . The difference with financing with a credit union is determined by the cash available. Credit unions are member owned and are not for profit that means they typically have lower fees and lower loan interest rates. For the quarter that ended in the year 2022, Experian discovered that credit unions have increased their market share over the last five years, but have fallen in with the Fed raising interest rates. Credit unions are a great source of financing. is one way drivers are finding relief in this . The Federal Reserve’s battle to stop inflation will not end anytime soon The Federal Reserve walks a thin line between regulating inflation and maintaining accessible prices for consumers. The auto market is a prime example of where inflation is not yet at a level that is under control. And unfortunately these rates are likely to be going away any time in the near future. “Affordability will be challenged for a long time to come in both the new and used markets,” explains Cox Automotive Chief Economist Jonathan Smoke. “It’s not the Fed’s fault, but it will impact consumer access to transportation.” KBB found an average income earner will need to work over 40 weeks to pay off the purchase of a new car. Such statistics, as Smoke notes, are making the financing of vehicles particularly difficult for those with lower incomes. “Higher rates are already shifting access to vehicles and financing to wealthier customers,” he says. The lack of access to vehicles creates a challenge for people to take the same actions they would have done in similarly challenging economic times. Looking back to the 2008 recession, consumers enjoyed the benefits of incentives for vehicles and the rush of dealers eager to sell. But with less inventory available and no relief provided to motorists. Two of the main reasons for the likelihood of inflation continuing to rise are that the overall level of debt is increasing– reflected in increased delinquency rates, and drivers who are experiencing higher rates of depreciation. The amount of auto loan debt continues to increase In total loan balances have increased 8 percent in the first quarter from 2021 to 2022 according to Experian. This feeds into the staggering . In addition to overall growth in debt the amount of debt has also seen a jump. The second quarter in 2022 TransUnion discovered it was 3.34 percentage of car loans were over 30 days in arrears. This is one of the highest rates of delinquency in the past few years. While it’s true part of the reason is due to the backlog of accounts due to the pandemic, the rise is nonetheless notable, especially for subprime borrowers who are the most affected. “Delinquencies remain at the historical average for the majority of credit products. However, levels have increased in the past year, especially among subprime consumer segments,” says Michele Raneri, vice president of U.S. research and consulting at TransUnion. The forecast also predicts that auto loan balances will surpass the remaining balance of student loans within the first quarter of 2023, as per the Consumer Financial Protection Bureau. This reinforces the effect of domino effects that decisions by the Central Bank have on vehicle affordability. As delinquencies rise to levels prior to the pandemic, it is crucial to know how rising rates of interest will create a costly situation, thereby increasing the risk of delinquency. Drivers are faced with faster-than-usual vehicle depreciation On the top of the high cost of vehicles and interest rates, motorists will likely lose money in the next few months because of the speedier depreciation of their vehicles according to Henry Hoenig, data journalist for Jerry. The main influence here comes down due to the time of year that people buy their cars. “People who bought used vehicles within the last year or two have paid exorbitant costs,” Hoenig explains. As the used car market cools these drivers are most at risk of rapid decline. However, it’s not all bad news for vehicle owners. “For at least the next two years or so, the value of used vehicles will likely not fall to where they were before the massive increase over the last two years,” Hoenig says. This is due mainly because demand won’t return to regular levels anytime within the next few months. This isn’t the right time to purchase an automobile. The high costs of car ownership aren’t the only expenses that Americans are currently being met with. “Consumers are being pushed on multiple fronts in the current climate of high inflation and secondarily by the higher rates of interest is the Federal Reserve is implementing to slow it down,” Raneri explains. A car purchase could be among the most expensive purchases many people make — and when interest rates are high it is possible to be a successful strategy. The reality of expensive prices is not a surprise, but waiting to make a large purchase like a car could result in savings. If you don’t get to wait make sure you are prepared to pay more and think about ways to save money when purchasing the car you want in .


Writen by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the details of taking out loans to purchase an automobile.

The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping their readers feel confident to manage their finances through providing clear, well-researched data that breaks complicated topics into bite-sized pieces.

Auto loans editor

Related Articles Auto Loans 3 min read Mar 22, 2023

Car Insurance 7 min read Dec 19, 2022

The loan is 4 minutes long and read on Oct 14 2022

Credit 4 min read Jul 28 2022



Legal Cookie settings Do not share my information with anyone else.

How we make money is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products and, services, or when you click on specific links on our site. So, this compensation can impact how, where and in what order items are displayed within the categories of listing in the event that they are not permitted by law. We also offer loan products, such as mortgages and home equity, and other home loan products. Other factors, such as our own rules for our website and whether a product is available within your area or at your personal credit score may also influence the way and place products are listed on this website. While we strive to provide a wide range offers, Bankrate does not include details about every credit or financial product or service. Bankrate, LLC NMLS ID# 1427381 | BR Tech Services, Inc. NMLS ID #1743443 |


(c) 2023 Bankrate, LLC. A Red Ventures company. All Rights reserved.

If you’re ready to learn more in regards to louisiana same day online payday loan advance ( look into the website.