In September, the Federal Reserve lowered its benchmark interest rate by half a percentage point. That was then followed by a quarter-point rate cut in November.
The bad news about the Fed’s rate cuts is that they could lead to a drop in savings account and CD rates. So if you have money to put into a CD in particular, you may want to open one today. Check out this list of the best CD rates to get started.
But the Fed’s rate cuts could be good news for borrowers. In the coming months, we could see a decline in loan rates, making a variety of financial products more affordable. If you’ve been putting off a car purchase, it could be a good time to start looking.
Car prices are high, but slowly falling
In September, the average transaction price for a new vehicle in the U.S. was $48,397, according to Kelley Blue Book data. That’s a 0.4% decline from the previous year, which is only a modest drop, but a drop nonetheless.
Of course, there’s no saying you have to go out and purchase a new vehicle. You might save a fair amount of money by purchasing one that’s used. Similarly, skipping some added features could help you keep the price of a new car more affordable. And if you can snag a competitive interest rate on an auto loan, you may find that a new car fits nicely into your budget.
How to score a great auto loan rate
The lower the interest rate on your auto loan, the more savings you can enjoy. Shop around with different lenders to see what financing options they have to offer. You can start with this list of the top auto loan lenders.
Another thing it pays to do is work on boosting your credit score. The higher that number, the more affordable an auto loan you might get.
There are several ways to boost your credit score, but some take longer than others. Your payment history carries more weight than any other factor when calculating your credit score, but it can take months to improve.
How to quickly boost your credit score
For faster results, try paying off a chunk of your credit card debt. Also, check your credit report for errors.
Specifically, pull a copy of your credit report from each of the three reporting bureaus — Experian, Equifax, and TransUnion — since they’re not guaranteed to all have the same information. If you see a mistake that paints you in a less favorable light, like a delinquency on a debt you’re actually current on, contact the reporting bureau at once and try to straighten things out. You can now access a free copy of your report from each credit bureau once weekly via annualcreditreport.com.
Because car prices are still pretty high and auto loan rates are also somewhat elevated, it’s not necessarily the best time to buy a car per se. But it’s also not a terrible time. And in the coming months, auto loan rates could fall even more, especially if the Fed makes more rate cuts as it’s expected to do.
If a new car could improve your quality of life, it’s not a bad idea to start looking. Just try to make sure your credit score is in good shape first.
