It is a difficult time if you are in the market for a new
car in this country currently, as they are continuously getting more expensive.
Not only are the cars coming with a higher initial price tag but interest rates
for vehicle loans has risen as well. The average interest rate is the highest
it has been in eight years and the Fed hopes to increase them again three times
in 2018. The demand for new cars has already been on the decline in this
country and with these new interest rates and car prices that demand looks to
continue to drop. I am curious if these factors in the American car market will
incentivize individuals to utilize public transportation more, which is far
more environmentally efficient or if it will encourage people to hold on to
older less fuel efficient models.
5 comments:
One way to avoid the problem of rising interest rates on car loans is to pay cash for the vehicle.
I agree with the fact that this could give people an incentive to start using public transportation that could be a good thing for the environment. Also looking at the current news it is interesting to see if car prices are going to be affected by tariffs on steel and aluminum that Trump is looking to impose, this could even push the prices even further up. Also if manufacturers rise too much the price too much how are their sales going to be impacted?
I'm interested to see if this affects gas prices at all. Also, I think infrastructure spending to improve public transportation is desperately needed if people are going to use it in any practical way - for instance, the Atlanta rail system (MARTA) has only added 3 stations in the past 10 years, despite the metro area (and job opportunities) rapidly expanding past the reach of MARTA.
Because of the high interest rates on car loans it would be interesting to see how that is effecting other asset markets like real estate. People looking to invest in assets might wait on buying cars and start tying up their money in other things with lower interest rates based on the rate of return and opportunity costs.
I think Felipe brings up a very good point with the steel and aluminum tariffs. Because of this car prices will most likely see an increase. Also something interesting I saw recently in Columbus were cars that were available to the public for rent. Almost like those bicycle stations for cars. You pick it up at a station, drive it to your destination and leave it for someone else to drive.
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