The average car loan interest rate has reached 6.3%, significantly higher than the under 4% rate of 2022. This increase is due not only to ongoing inflation but also to changes in consumer behavior and supply chain dynamics, with new car prices rising 29% since 2020, hitting an average of $48,000. While the Federal Reserve's limited rate cuts contribute to high loan expenses, borrowers find that shopping for better rates may not lead to significant savings, highlighting challenges in financing, especially for larger loan terms.
The average car loan interest rate has surged to 6.3%, an alarming shift from the under 4% in 2022, influenced by persistent inflation and supply chain issues.
Despite the end of supply chain problems, car prices continue to soar due to manufacturers' ability to sustain elevated pricing levels, with new car prices up 29% since 2020.
Shopping around might not yield lower car loan rates; major banks like Chase and Ford are setting rates at a high 7.7% and 7.0%, respectively.
Car buyers face steep monthly payments, often akin to mortgage payments, with options for low rates mostly limited to special deals on new or electric models.
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