Mark Gilbert, CEO of ATN, Comments on the Evolving U.S. Auto Loan Trends
According to the Statista report, car loan interest rates slightly increased in May and June 2024, following a period of rapid escalation, when rates rose from under 4% in February 2022 to 7.9% by early 2024.
Understanding the Implications of Rising Rates
Gilbert acknowledges that the rapid rise in interest rates has posed a challenge for consumers and the auto industry. He says, “The sharp increase in rates over the past two years has undoubtedly impacted consumer purchasing power and has led to a more cautious approach to financing, especially among buyers of new vehicles.”
He further explains that the Federal Reserve’s influence on interest rates has been critical in driving these fluctuations. Gilbert adds, "The Fed’s interest rate policy is closely tied to inflation control. While it aims to curb inflation, it also directly impacts the affordability of auto loans. As inflation has stabilized, we expect to see a reduction in rates, lowering the cost of car loans. This will be a much-needed relief for consumers and a boon for the auto industry, likely expected by September 2024.”
The Critical Role of Car Financing in the U.S. Market
Gilbert emphasizes the importance of car financing in the U.S. market. He claims, “In a country where car ownership is often essential, particularly outside major urban centers, financing enables access to vehicles for the average consumer. The fact that most new vehicles in 2023 were financed underlines the necessity of maintaining favorable loan conditions.”
Looking Forward
Despite the current challenges, Gilbert remains optimistic about the future of auto financing in the U.S. He says, “As the market stabilizes, we expect to see more balanced interest rates, which will support both consumers and the broader automotive industry. In the meantime, there are some pretty attractive lease programs out there for consumers to really consider.”
Mark Gilbert
ATN
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Distribution channels: Automotive Industry, Business & Economy, Companies, Electronics Industry, Energy Industry
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