Fed Continues Interest Rate Increases
Inflation-fighting series cuts further into consumers’ ability to afford purchases such as cars.
Affordability of new vehicles improved over January but remained worse than a year earlier and well above what the typical American household can afford.
IMAGE: Pixabay/NikolayFroloch
The Federal Reserve instituted another quarter-point interest rate hike today in a series of increases that started a year ago to try to tamp down inflation.
The ninth hike in the series to the Fed’s benchmark rate is making it harder for some consumers to borrow money for purchases, such as vehicles.
Affordability of new vehicles improved over January but remained worse than a year earlier and well above what the typical American household can afford, according to Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
The typical household can afford a $400 a month car payment, but February’s average monthly payment as at $765.
Year-over-year vehicle loan debt per borrower increased 4.4% in the fourth quarter to $16,769, according to TransUnion. It was the 11th straight quarterly increase. The year-over-year 60-day delinquency rate rose 1.04% but stayed under the fourth-quarter average between 2007 and 2013.
“While we observed an uptick in auto loan delinquencies, there are reasons to believe they will continue to remain relatively low in the near future," said Pete Turek, vice president of automotive in TransUnion's financial services business unit.
"First, while auto loan originations are increasing at a rapid pace, the percentage of nonprime accounts remains low. In fact, the percentage of nonprime borrowers for all auto loan accounts was lower in the [fourth quarter] than it was the previous year."
Originally posted on Auto Dealer Today
More Industry
Charger Network Growth Slows
Despite a projected increase in public EV chargers in 2026, charging infrastructure remains a top concern for consumers as the gap between the most and least EV-friendly places remains substantial.
Read More →
Lenders, Consumers Take on More Auto Loan Risk
September records loosened credit access the most in over a decade as buyers took advantage of the conditions to afford trading, though loan applications fell.
Read More →
Next-Gen Hybrids in Sight
Dealerships can expect to see revamped hybrids from Honda next year as the company rolls out a new system and model lineup.
Read More →
Gem State Stores Change Hands
A larger auto group founded in the industry’s early years sold two franchises to a neighbor group that's on a growth spurt.
Read More →
Charging In Motion
Honda has been researching wireless in-motion charging for electric vehicles since 2025, and new technology developments have put it a step closer to a final product.
Read More →
Twin Cities Stores Sell
Minnesota-based Walser Automotive Group made what it called the most significant acquisition in its history with a three-rooftop deal in Minneapolis.
Read More →
U.S. Auto Sales Still Below Prepandemic Levels
Mobility Global industry observers don’t expect the market to return to the higher volumes that became routine before Covid but to stay well below its potential.
Read More →
The Powertrain Shift
Electric-vehicle owners are backpedaling, according to new data, with product availability driving many to shift back to gas-powered engines.
Read More →
Achromatic Autos
The shades that dominate the U.S. car market don’t call attention to themselves, though grayscale may have plateaued after a 30-year upswing, research shows.
Read More →
Used-Vehicle Affordability Worsens
Listing prices in August defied seasonal trends, rising above $27,000 for the second time this year.
Read More →