Auto loan rates to rise in 2018: What it means for you

by Julia Guardione Updated on: May 23, 2019

As we enter a new year, economists have made their official predictions about what 2018’s auto industry has in store. Overall, interest rates will likely increase for subprime borrowers.

In recent years, lenders have offered decent rates on auto loans, even to subprime candidates, in order to boost sales and respond to the increasing price of new cars. However, the Federal Reserve increases interest rates if they believe there are too many risky loans funding sales. This increase is meant to deter subprime borrowers to prevent another loan bubble like the infamous crash in 2008.

In an article in Forbes, credit-reporting agency TransUnion forecasted that lenders will continue to prioritize lending towards “lower risk, better-qualified borrowers” in 2018.

So, what does that mean?

According to the Washington Post, these increased rates should only slightly effect rates for those with good credit. However, that may not hold true for riskier borrowers. Auto loans, especially on new cars, may be unaffordable for many within this group. Some trends that may arise from this shift are:

  • Bigger down payments.
  • Purchasing used cars instead of new.
  • Longer loan terms.

With these predictions in mind, it’s important that you make the best choices for you and your wallet when considering a new (or used) car. And not to worry – refinancing can help.

About The Author


Julia Guardione

Julia Guardione is an auto refinance writer based in Austin, Texas. She is a graduate of Texas State University and a lover of all things outdoors.


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