Wondering if now is a good time to finance your next car? The answer is yes, now is a perfect time to buy. Auto finance rates have been climbing for awhile now, and it looks like they’re only going to continue to rise as the year goes on.
Buying a car is already difficult, especially if you don’t have the credit to get prime finance rates. Discover why, if you’re planning to finance a car in 2017, you should act now as auto loan rates are likely to go up, and waiting too long could mean high interest on your loan.
Auto Finance Rates Expected to Rise in 2017
With the economy on a continual but slow recovery for the past eight years plus, borrowers with good credit have seen historically low rates for everything from houses to car loans. In fact, at their lowest in 2016, peak rates were under 3% for those with the best credit for both used and new cars. For average borrowers, rates hovered in the low to high 4% range.
Rates to Finance a Car in 2017
For those looking to finance a car in 2017, if you’ve got excellent credit, the rates will probably still remain somewhere in the 3 to 4% range. However, for those with average credit, you could see rates go as high as 5.2% for used cars, and 4.5% for new cars. Those with poor credit could see even higher rates as the year goes on.
Reasons for Rate Hikes
There are many reasons for rake hikes. Many might point to the incoming administration, which is friendlier to businesses and will likely result in more lending, but at higher rates. However, it’s also important to note that there are delays of several years between government actions and market forces on a large scale.
This means that the rate hikes we’re likely to see this coming year are due to rate hikes from federal funding over the past couple of years. The reason for this is that while federal funding and loan rates are closely correlated, it takes time for these actions to move through commercial lending channels.
Minimal Effects, in the End
It’s also important to realize that while these loan rates are continually going up, the direct effect on car buyers this year will be small. It’s likely to have a bigger effect on those with poor credit than it will on those with great credit, as when you get into the higher range, you’re often dealing with people who have less means with which to pay the higher costs.
In the end, those looking for the best deal on an interest rate should think carefully about financing a car in 2017 early rather than later in the year. You’re much more likely to get a favorable interest rate the sooner you apply for funding.
If you’re looking for a great auto loan with the best possible rates for your credit whether it’s good, bad or nonexistent, BlueSky Auto Finance can help. We offer a range of loan options for people of all walks of life and we’re ready to help you. Check out the loan options and process, and get approved through our national network of lenders today!