CornMonkey

well, i've been hearing news that the feds are gonna raise the interest rate again... but i'm wondering if this has any affect on car loan rates. the mrs. and i are debating when to buy our car. anyone know?

clutchy

If ever i was going to buy a new car, i'd just go for some kind of special financing from the car makers in house financing corp. Jeep was doing a crazy 0% apr awhile ago.

that's what i'd look for.

I've also recently been alerted that some sales guys are sheisty. You agree to a specific rate which would equal lets say $346/mo. then he comes back and says how does $375 sound? sounds good to you because you didn't know that he just tacked on an additional 1/2% above what was agreed upon. know your TVM(time value money) equations.

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LK was treated unfairly

thanks X

Jeffbx

That why you should never finance a car at the dealership. Take whatever rebate they offer instead of the low financing, and go to your bank or credit union for the loan. You'll almost always get a better rate that way.

CornMonkey

heh, it's been well known that most car salesmen are shady. i know how their games works, and i know about their financing schemes work too. in fact, i actually look forward to stepping into the dealership to play their game using their own rules.

i'm going to go through a credit union or another bank for financing, but my question (from my original post) is whether or not fed. rate hikes are going to affect car loan rates as well. for example, if i got a loan rate for 4.99% now, would i be able to get this same rate AFTER the feds raise the interest rate later on in the year?

i do'nt think it would change since car loan rates have been relatively the same throughout the years. right?

InfiniteNothing

If it's a variable rate loan then yes, if it's a fixed rate loan then no.

clutchy

You're going to have to ask LK about that, I don't know enough to say for sure.

Although from my psych background, salesmen think it's ok to lie if the interested party is playing around with them as well. Just something to think about. I show up at dealerships every once in awhile, and when i get approached i make it abundantly clear that i'm not interested in buying a car. I've led people on before and it never works out very well.

LegendKiller

The rate really depends on supply and demand.

If rates keep going up and the auto companies keep raising, then demand for cars will go down. If they want to keep business up, they keep rates down.

You have seen the same thing in housing mortgages, despite raising rates, 30-year fixed have not kept up with the raise in the fed funds rates. Why? Because mortgage brokers and house sellers are trying to intice people to buy. However, given the fact that the supply of money, and how much it costs, is set by the Fed, even the brokers can't keep up their current pace, and have to eventually raise rates.

From current speculation, we will see another .25-.5% raise in rates within the next two quarters with it flatening out after that. For the first time in several quarterly meetings a Fed board member (Minneapolis) voted against an increase, so we are seeing some pressure to cap the increases.

AS far as your decision, get the car and the financing if it makes sense to you now. I wouldn't change your mind for a 25bp (.25%) increase in rates, of which that won't totally be passed to you.

Daedalus

Just to underscore that point, compare the payments on a $25k loan for 60 months at 5.25% vs. 5.75%. The difference is ~$6. That's just a happy meal in some zip codes, ~$350 over 5 years.

CornMonkey

thanks all. once again got|apex = got|answers.

Merlin

I don't think they are going to raise them too much more. Bernanke's last address mentioned that keeping shorter rates low and long rates a little higer will provide encentives for foreign money to continue to flow into our country and stay here for the long term. Since we need this to fund our deficit I think it will play out that way. But of course attempting to predict interest rates is the height of folly.

Yes, the rates managed by the Fed will be reflected in the rate you get when buying a car. Especially if you go through a bank. If you go through a dealer they might take a hit on the financing to make the deal.

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