Interest Rates Impact Auto Sales and Financing Options

Automakers are facing pressure to offer discounts as higher borrowing costs make consumers nervous. The average interest rate on a new car or truck loan is at 8.95%, compared to 5.66% a year ago. Recent banking turmoil has tightened credit access and made lenders "acutely aware of the risk that they are potentially dealing with and essentially are trying to ensure that they are getting a risk-adjusted return." The same pressures are causing dealers to offer discounts, which averaged about $1,474 per vehicle in February, the highest level in a year.