Are Auto Loan Rates Going Up In 2022?

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Managing Editor

As CarsDirect’s resident pricing expert, Alex offers must-know analyses of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured by The Wall Street Journal, Fox Business, Motor Trend, Automobile Magazine, and more.

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, Managing Editor - December 15, 2021

Following a rocky year ending with serious concerns about rising inflation, Reuters reports that the Federal Reserve signaled today that it will set the stage for three quarter-percentage-point interest rate hikes in 2022. However, this may not translate to significantly higher interest rates for shoppers looking to take out a car loan.

In a report published today, Cox Automotive estimates "consumers will likely see auto loan rates higher by at least a third of a point to potentially three-quarters of a point by the end of next year." While that may sound alarming to some, the company notes that auto loan rates would remain attractive from a historical standpoint.

We're inclined to agree, although manufacturers could respond in different ways. For example, a chip shortage has resulted in a reduction in incentives like rebates and APR deals. At the moment, year-end car deals are scarce, with important limitations on 0% APR deals like reduced terms involving 36-month loans.

New car shoppers in 2022 could face a threefold price increase. First, there's the prospect of paying a higher price at dealers due to an inventory shortage anticipated to last well into next year. Then, there's the likelihood of fewer incentives. Finally, the possibility of higher interest rates could be a cause for concern.

When it comes to factory car incentives, there could be a reason to be optimistic. For example, as recently as last month, Chrysler offered 0% financing for up to 84 months on select models. Even GM is offering interest-free loans for 72 months and an increasing number of manufacturers are paying their customers to wait.

Depending on how things shake out, there could still be deals if you know where to look. CarsDirect's team of experts looks at the latest deals from every major automaker and will be on the lookout for incentives that can save consumers money whether they're planning to buy or lease a car as we head into the new year.

Sources: Reuters, Cox Automotive

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, Managing Editor

As CarsDirect’s resident pricing expert, Alex offers must-know analyses of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured by The Wall Street Journal, Fox Business, Motor Trend, Automobile Magazine, and more.

Follow On: Twitter

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