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Here's how much Federal Reserve interest hike could affect auto loans

Consumer Prices
Posted at 11:24 AM, Sep 23, 2022
and last updated 2022-09-23 11:24:41-04

BLOOMFIELD HILLS, Mich.  — 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 at the Detroit Auto Show.

"I mean, cars are expensive enough," she said.

Interview with Nadine Alpern

WXYZ spoke to auto experts at Golling Chrysler Dodge Jeep Ram in Bloomfield Hills to figure out how much people like Nadine will be affected by this hike.

Sales representative Peter Rasho said, "Well, the auto loans are 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 monthly payment would be $563 per month before the hike. 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.

"It’s crazy. The height is going up, but still, we have to be positive about everything," Rasho said.

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.

Sarah Grimmer and Jon Austin at WXYZ first reported this story.