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 RateGenius’ auto refinance expert. She is a graduate of Texas State University and a lover of all things outdoors. She lives in Austin, Texas with her dog and cat. She’s always open to new ideas, so if you have any suggestions or questions, email her at pr@rategenius.com.


Read More

by Chonce Maddox

Not all Credit Scores are Created Equal — Just Look at UltraFICO

Did you know you have more than one credit score? Which one is the best or the right one? Your score matters. Your credit score is one of the most important numbers influencing your financial health. For lenders, it is a major factor for determining your trustworthiness as a…

by Julia Guardione

How to fix errors on your credit report

The credit report — it is a reflection of you and your credit history. How does it affect your financial future, what does it all mean, and how long ago have you reviewed it? The task of reviewing your credit report is necessary for your financial fitness and your…

by Stephanie Colestock

Auto Loans Contribute to Continued Climb of Household Debt

Whether through credit cards or student loans, “debt” is a four-letter word that can wreck the financial future of many. But how big of a role do auto loans have in that equation? It’s no secret that Americans are in more debt than ever before. Between rising home prices,…

review review

Customer Reviews

Read our 11082 Certified Reviews

4.9

READ OUR REVIEWS
apply now apply now

Apply Now

Lower your interest rate and drop monthly payments by an average of $76*/month!


GET STARTED