BLOOMFIELD HILLS, Mich. (WXYZ) — On Wednesday, the Federal Reserve announced they’re hiking interest rates by .75%. One of the areas most affected is auto loans.
It’s a concern for people like Nadine Alpern, who spent her Thursday afternoon shopping around at the Detroit Auto Show.
“I mean cars are expensive enough,” she said.
To figure out how much people like Nadine will be affected by this hike, 7 Action News spoke to auto experts at Golling Chrysler Dodge Jeep Ram in Bloomfield Hills.
Sales representative Peter Rasho said, “Well the auto loans is going to go up definitely, but that’s not going to stop individuals from buying or leasing vehicles.”
Working with a financial expert, we did the math.
On a loan balance of $35,000 for six years, your payment before the hike would be $563 per month. With the Federal Reserve hike of .75%, your payment would go up to $575 per month.
That’s a $12 difference per month and a $144 difference per year. But don’t get too comfortable.
Rasho said, “If you can afford it, go for it because it’s going to get worse.”
Rasho says he’s been encouraging his customers to lock in their deals sooner rather than later because the Federal Reserve is expected to hike interest rates by another 1.25% this year.
“That’s crazy. I mean, give us a chance to adjust,” Alpern said.
That’s why it may be best to start looking now and give yourself time to shop around.
Rasho said, “It’s crazy. The height it’s going up, but still we have to be positive about everything.”
As of August, the average national monthly payment for a new car was $667 per month.
The average national monthly payment for a used car was $515 per month.