Best moves to make now: Auto loans

Even with the Fed holding steady on interest rates for December, car shoppers will like what they see when it comes to new-vehicle loans.

Last month's cut in the Fed funds rate means you'll keep more money in your pocket if you're in the market for a new-vehicle loan. research shows that interest rates on new-car loans tend to shift in lock step with the prime rate, which moves up and down with the rates set by the Fed. Used-car rates make the same moves but tend to lag several months behind.

But not all new-car loans are tied to the prime rate.

Automakers want to keep their factories running, so they'll sometimes have their own lenders, such as Ford Motor Credit and General Motors Acceptance Corp., make rock-bottom financing deals. They'd rather lose money on the loans than suffer the losses associated with shutting down plants.

Best moves now:
If you're arranging financing for a new car, see what the dealer has to offer. They may make a better deal in an attempt to keep vehicles moving off the lot. Discount financing deals ranging from zero to less than 5 percent are widespread.

If you have a car loan, it may be worthwhile to consider refinancing.

Rates on 48-month new-car loans averaged 8.04 percent Dec. 4, while rates on used-car three-year loans averaged 9.02 percent.

Search for car loans in your area.


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