VW Raises Loan Interest Rate To 4.7% APR

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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 - May 4, 2022

VW has raised its best interest rate to 4.7% APR in a price increase that could disappoint new car buyers ahead of the Memorial Day holiday. The move came a day prior to the latest Federal Reserve interest rate hike, and could significantly increase the cost to buy a new Volkswagen car or SUV in the month of May.

VW's featured interest rate is now 4.7% APR for up to 60 months. According to an incentive bulletin sent to dealers yesterday, the rate applies to all 2022 vehicles with a gasoline engine. In April, the best rate was 4.31%, preceded by an APR of 3.36% in March. A year ago, our records show the rate was 0% for 60 months.

Compared to VW financing deals around this time a year ago, we estimate that the latest rate effectively translates to a $3,700 price increase in the cost to buy a $30,000 car. Curiously, the rate of 4.7% is higher than the company's luxury brand. For reference, the 2022 Audi A5 offers rates as low as 2.49% for 5 years.

But that's not all. VW Credit is allowing dealers to mark-up these so-called standard rates by as much as 1%. What's more, choosing a longer loan will involve a significantly higher rate. Even with Tier 1 credit (in VW's case, a FICO of 740 or higher), that would entail a rate of 5.45%. And that's before a dealer markup.

For now, there appears to be no relief in sight for VW buyers looking to score a deal. Facing a chip shortage impacting production, VW isn't even advertising lease deals on its website. As a result, getting a handle on VW lease prices or financing rates could end up being a lot more difficult than what buyers are used to.

VW isn't the only brand raising interest rates. As we reported previously, Hyundai now has higher rates than Genesis, and we're also seeing Infiniti rate hikes as well as Honda interest rate hikes. Even Tesla has raised interest rates. The changes could put pressure on some consumers to wait until market conditions improve.

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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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