Rising Interest Rates Lead to Increased Auto Loan Rejections

As the Federal Reserve raises interest rates for the 11th time, car buyers are feeling the burden with higher sticker prices, tightened credit standards, and steadily increasing auto loan rates. A study by the New York Federal Reserve found that auto loan rejections have reached the highest level since 2013, with 14% of applicants being rejected. Rejection rates for credit cards, mortgages, mortgage refinancings, and higher credit card limits have also risen. Credit card rates are at all-time peaks, and mortgage rates have more than doubled in two years. The average price paid for a new vehicle is 25% above the pre-pandemic average, and used vehicle prices have jumped 45% above pre-pandemic levels. The combination of higher loan rates and increased vehicle prices has made monthly payments unaffordable for some buyers.