Fed's Rate Cut Offers Little Immediate Relief For Auto Loan Borrowers

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Fed's Rate Cut Offers Little Immediate Relief For Auto Loan Borrowers
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Despite the Federal Reserve's decision to cut interest rates by 50 basis points, Bank of America analysts predict minimal impact on auto loan borrowing costs in the near future. While acknowledging that relief may be on the horizon, they emphasize it will take a series of rate cuts before consumers see significant affordability improvements.

Americans looking to buy a vehicle in the near future might feel hope that the Federal Reserve 's 50-basis-point federal funds rate cut on Wednesday might bring down the interest rate on their next auto loan, but Bank of America analysts say there will not be much of an impact on borrowing costs in the near future.

"Regardless of the magnitude, we highlight that the transmission of a lower fed fund rates to auto loan rates at the consumer level is slightly delayed," the analysts wrote, adding, "consumers would likely start to reap the benefits from rate cuts in 2025+."But it will take a lot more than the single rate cut from the Fed to make a notable difference in auto loan rates.

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