Rising interest rates make the process of buying a car more complicated. In order to curb a 40-year high in inflation, the Federal Reserve has raised interest rates two times in the last three months. More interest rate hikes are expected before the end of the year.
So what do higher interest rates mean when buying a car? It means financing the vehicle will cost you a higher price. You’ll have to pay more in interest on the money you borrow. That can add up to thousands of dollars over the lifetime of the loan.
That’s not all. While the overall rate of inflation has been about 8.5% year-over-year, the price of automobiles has risen significantly outpaced that figure. According to the US Bureau of Labor Statistics, the price of new cars jumped 11.8% last year and has gone up more since. It’s a drop in the bucket compared to the cost of used cars, which according to Consumer Affairs, have seen a jump of 35% year-over-year! That’s an average increase of $9,080. Wow.
There are plenty of reasons for the spike in prices. We’re still seeing the effects of production backlogs caused by the pandemic, along with the well documented global microchip shortage. Add in the current high demand for cars, trucks and SUVs, and Voilà! It’s a recipe that has us all spending more.
There is a way to whether the storm. If you currently have a car, take great care to keep it in working order.
- Be religious about changing your oil on schedule
- When your warning light is trying to tell you something, listen. Get your car to a certified mechanic without delay.
- Use the right kind of gas always.
- Keep your tires inflated to the proper levels and rotate them regularly.
- Replace belts and filters before there are problems.
- Keep all of your fluids topped off.
- Wash and wax your car regularly to prevent rust. At least every two weeks is recommended.
- Get your manufacturer’s scheduled maintenance done on time. Many recommend preventative service at 30,000, 60,000 and 90,000 miles.
If you don’t stay ahead of problems, fixing things after they breakdown will be far more expensive. Especially if you have to charge those repairs it to a credit card. Those interest rates run from 16% to 18% to 20% and beyond (and oh by the way, the current interest rate hike means those rates will be going up too).
The solution is to protect yourself from all of this with an extended warranty plan from Protect My Car. You choose the coverage plan that works for you and your budget. You have a set monthly premium, and covered repairs are taken care of. Our in-house representatives handle your claim from start to finish, and work with your preferred [certified] mechanic to make sure you don’t have to pay any more than you need to.
Visit protectmycar.com to learn more about our Selective and Comprehensive coverage plans to see which is right for you.