Rising interest rates mean higher borrowing costs to buy a car

On top of elevated prices for new and used cars, financing the purchase of one is about to get more expensive.

With the Federal Reserve boosting a key interest rate by half a percentage point on Wednesday, borrowing costs are poised to head higher on a variety of consumer loans, including those for autos. This marks the Fed’s largest increase in more than two decades.

“In the past, interest rate hikes didn’t affect the new car market significantly because automakers subsidize many loans,” said Jessica Caldwell, executive director of insights for Edmunds.

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