Buffalo, NY (WBEN) While the Federal Reserve action on interest rates to stave off inflation is hoped to have a long term beneficial goal, there is a more immediate and mixed impact on the local car buying economy.
One local dealer tells WBEN the prices are coming down, but questions whether it will be enough to bring and keep car buyers in the showroom.
Marty Pecoraro of River Front Auto Sales says he sees good news and bad news. "We're seeing big rates for loans on cars. So the bad news is, payments are going to go up a little bit," says Pecoraro. "The good news, though, is we're starting to see the car prices come down a little bit." But he says it's not enough to offset the higher borrowing costs. That means getting people approved may be tougher.
Pecoraro says approval is based on what people have budgeted for buying a car, new or used. "They were coming in thinking a payment might be $350. But now with the new interest rates, payments are costing $30, $40 or $50 more a month. So it's costing some of the people out of the market," explains Pecoraro. He says it's going to probably be a little tougher for car shoppers, unless car prices start really coming down and or the rates start to level off or come down.
Dan Keleher of Niagara's Choice Federal Credit Union says car rates are still pretty much at historically low levels, but it will make buying a car a little more expensive in the weeks to come. But he says there's been an increase in applications for car loans. He says about 70 percent of loan applications in the last 3 months have been for car purchases. "People are trying to get ahead of low inventories, we've seen more used car purchases, and so they're not waiting for new cars anymore. And they are trying to get ahead of the interest rates, because that's what they hear is that interest rates are rising," says Keleher.
Keleher predicts interest rates will go higher. "My prediction is that interest rates will probably go about 150 basis points, or one and a half percent higher, between now and the end of the year," believes Keleher. He says it will make car buying more expensive. He also thinks there will be a slowdown in auto buying because of the push of interest rates, making cars a little less affordable.
