Interest rate hikes expected in 2022
According to recent reports, interest rates are expected to start climbing next year. It may impact the buying decisions of some borrowers now, but is this rush to buy necessary?
CarsDirect recently reported that the Federal Reserve is planning to raise rates from 2022 with rate hikes of three-quarters of a percentage point. This means that overall interest rates may rise, but it remains to be seen whether or not you’ll feel it as a buyer – nothing is set in stone.
For car buyers, this can mean higher interest rates on the already rising auto loan prices. However, as a borrower with bad credit, you might not feel the pinch as much as someone who has had better credit. Borrowers with bad credit are already experiencing higher interest rates, so the bite may not be as big as for someone who is entitled to lower interest rates for to start.
Interest rates and auto loans
When rates rise across the industry, everyone can expect to pay a little more for the privilege of getting a car loan. Interest is the cost of borrowing money, and the higher your rate, the more you end up paying over a period of time. Those with prime credit typically get lower interest rates than borrowers with lower scores.
As a borrower with bad credit, your already higher rates may increase slightly, but if you’re already paying more than the standard APR, you may not notice the increase as much. However, in order to get the best possible rates, you can use these tips to lower your interest charges.
- Bring a big down payment. The more funds you put in, the less interest you have to pay and the less interest you pay over the course of your loan.
- Take out a short-term loan. If you want to save on interest charges, reduce the payment period. Interest charges accrue daily based on your loan balance, and the faster you pay off your loan, the less interest you pay.
- Repair your credit. It’s not something you can do overnight, but every bill paid on time is a step in the right direction. Another thing that can improve your credit is an auto loan. Manage one properly, and you can make great strides in securing a lower interest rate on your next car loan.
Ready for an auto loan?
If you’re looking to secure a car loan before interest rates rise in the coming year, we want to help. Auto Express Credit works with a coast-to-coast network of special finance dealers who are registered with subprime lenders who wish to help. To be matched with a dealership near you, simply complete our quick and free auto loan application form.