TAMPA, Fla. — The Federal Reserve on Wednesday approved a fourth consecutive three-quarter point interest rate hike.
It's bad news for consumers who are already tightening their wallets as inflation continues to skyrocket.
For people who are looking to purchase a new vehicle, it's another hit as new and used car sales remain at an all-time high.
Kyle Mastronardo is a car aficionado and recently purchased a vehicle. He has financed vehicles in the past, but because of the rate hikes, he chose to pay in cash.
As for purchasing vehicles in the future, he said he will have to be a little more conscious.
"I am just going to approach everything being a little more conservative than I have been in the past," Mastronardo said.
Greg McBride is the Chief Financial Analyst with Bankrate.com and said for those who are in the market for a new or used vehicle they may want to put the brakes on buying right now if they can.
"Rising interest rates make it more expensive to borrow. If you are in the market for a car, that financing cost has gone up," McBride said.
Currently, he said the average APR for a new car is 5.6% and 6.2% for a used car.
This time last year, the average APR for a new car was 3.88% and 4.5% for a used car.
McBride said the monthly payment for a $40,000 vehicle with a five-year loan will cost the consumer an extra $32 a month.
Credit unions that have a tendency to give better rates are seeing their share of rate increases as well.
In the past, at Achieva Credit Union, a person could get an interest rate as low as 1.89%.
That has since jumped to a starting APR of 4.5% depending on factors like a person's credit score and if they're buying used or new vehicles.
"For example, it was 4.50%, but if the car is a used vehicle and it's over 100,000 miles, it could tack on .25%, making it 4.75%," said Jade Escolano with Achieva Credit Union.
McBride said Wednesday's recent rate hike marks the 6th one this year, and unfortunately, he said he doesn't see this being the end.
"We will see a 7th before years end and we will likely see an 8th and 9th in 2023," McBride said.
