As you probably heard, the Federal Reserve cut it's target fed fund rate and discount rate on Wednesday. Does anyone know if this will affect auto loan rates? The CNN report I read indicated that immediately after the decision, M&T Bank Corp cut it's prime lending rate by half a percentage point. I would assume that if other banks follow suit, this will directly affect auto loans. Does anyone know for sure? Has anyone seen a change in quoted auto loan rates? Thanks!

 

Domestic auto manufacturers' need to sell inventory and keep marginal production numbers has driven special incentives. Conventional finance sources will continue to responded to market conditions. Yes, the drop in the Fed's rate will find it's way to auto financing if other market conditions allow it.

Manufacturer's need an increase in sales WITHOUT finance incentives! Its not a good thing when the sale of a product is driven by the cost of money. Honda has had no trouble exceeding sales quotas relying solely on product quality, something foreign to American auto manufacturers.

 

An update, in case anyone's interested...

I just applied for a loan, and my credit union offered me a rate which is exactly .5% less than the lowest rate they had previously posted on their website. I think this can be attributed to the Fed rate cut. Now we'll see if the manufacturer can do better.