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How You Can Benefit From Low Interest Rates on New Cars

How You Can Benefit From Low Interest Rates on New Cars

It’s no secret that the national economy and interest rates have long enjoyed a symbiotic relationship, following each others every move as they travel through peaks and valleys. However, the relationship between the two differs from most in that their symmetry bears opposite results for the consumer. When the economy is down, which is a bad thing, so are interest rates, which is a good thing. The result leaves the typical consumer in a Catch 22: The best time to get lower rates is when it isn’t a good idea to make large purchases.

Timing is Everything

Therefore, to get lower rates, you’ve got to know when to strike. If you take advantage of the good deals while the economy is still floundering, you’ll be taking a tremendous risk because you can’t be sure of your own financial future. However, if you wait until things have turned around, the rock-bottom financing will be yesterday’s news. It’s not unlike playing the stock market, where the most successful investors are the ones who buy stock just before it explodes.

Winds of Change

Well, brace yourself for a big bang. Recently, Treasury Secretary Timothy Geithner and former Federal Reserve Chairman Alan Greenspan each revealed that they believe the economy is no longer on the verge of collapse and will continue to improve throughout the remainder of 2009. And a separate poll conducted of the country’s largest employers indicates that no further layoffs are planned. In fact, a number of new jobs are expected to be created across the country as we enter 2010. Supporting this turnaround is interest rates on new cars, which have already begun creeping upward. That’s not to say it’s too late to get lower rates; interest rates on new car loans are still the lowest they’ve been in years.

This means the time to take advantage of financing on new cars is now. If you can afford it, purchasing a new vehicle when the country is on the brink of recovery will mean you’ll enjoy lower payments long after things have turned around and interest rates have climbed back up to where they were before. It also means you’ll pay much less over the life of the loan, which could put you behind the wheel of a vehicle that might have been previously unobtainable.

A Kinder, Gentler Dealer

In addition to being able to get lower rates, odds are you’ll get a much better deal on the vehicle you purchase. Ideally, the typical auto dealer likes to maintain a two- or three-month inventory; having more cars than that costs too much to maintain and doesn’t leave room for newer incoming models. But the slowdown in new car purchases has left most dealerships with inventories that would normally take a minimum of six months to unload. As a result, they’ve become desperate to reduce their inventories–and their salespeople have been instructed to do so at all costs. So when you walk onto a lot, you’ll likely find a much broader selection of vehicles to choose from, and a dealer that’s never been more willing to work with you and your budget. And if you’ve managed to maintain a near-perfect credit score throughout the recession, you might be able to drive off the lot with the best deal of all: In an attempt to relieve themselves of their extra inventory, many new car dealers are offering zero-percent financing.

Drive Along the Road to Recovery

Still, you don’t need perfect credit to get lower rates on new cars. And with all indicators pointing to economic recovery, you don’t even need insider information to know when to act. Making your move now, before the economy and interest rates return to normal, will put you behind the wheel of a new vehicle while leaving more money in your pocket.

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