Increases in interest rates likely, but car owners insulated from rising APR…
Rachael Jones, Auto Trader’s Director of Motor Finance:
Despite the softening in inflation, underlying price pressures make further increases in base-line interest rates highly likely. Reassuringly car owners will largely be insulated from any rise in APR though, as unlike some mortgages, automotive finance contracts are always set at fixed rates. And even for those entering new agreements, the impact on their monthly bills will be limited.
"Despite the average used car APR increasing nearly 2% over the last 12 months, the effect on average monthly car payments has only been an additional £8 over the same period. On our marketplace, the recent rise has done little to dampen demand - we’re seeing record levels of engagement with our finance calculators as more people look to finance to fund their next car purchase."
"It’s worth highlighting that the ongoing rise in used car prices should also have a limited impact on car buyers, as part exchange values have increased as much as the value of the car being sold."
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