The Federal Reserve announced Tuesday it would keep interest rates at record lows, as the U.S. economy recovers slower than expected. The good news for car shoppers is that auto loan rates will most likely stay at record lows as well.
The federal funds rate will remain near 0 percent, where it has been since December 2008. The Federal Reserve said the economy is not yet showing enough growth to support higher rates, FOXBusiness reports.
The Fed also said rates would stay at "exceptionally low levels" for an "extended period," CNNMoney.com reports.
Keeping the federal funds rate near 0 percent means that it will cost banks, credit unions and lenders less to borrow money to give auto loans to consumers. This can help consumers save money by borrowing at a lower cost for their next car.
Low interest rates are designed to convince Americans to buy and spur the economy. With no increase of interest rates in the near future, consumers aren’t forced to rush to take out an auto loan now if they can also save money by taking out a car loan in a few months.
"But the fact remains that the U.S. economy cannot grow on its own – that is, without artificial stimulus from the government – until the jobs market recovers and, by extension, the real estate market improves," FOXBusiness reports. "While there are some pockets of strength on the homes front, the broader housing market remains very weak, and the jobs market is horrendous."
If now is the right time for you to buy a car, this announcement by the Fed means you’ll save money on your auto loan financing, which during all the economic bad news, is a bright spot.