As interest rates continue to rise, are car leases becoming more expensive? In this video, Lenny Komsky from Grand Prix Motors discusses tips on mitigating the expense of car leasing and how they can be a great option for those looking to save money on their next vehicle.
Impact of Rising Interest Rates on the Car Industry
Car lease businesses and financing of new and used cars are going to bear the direct impact of rising interest rates. Do you want to know if the rising interest will affect car leasing? Read the blog to the end.
Lenny Komsky, the owner of Grand Prix Motors, recently appeared on the Alpha Insider podcast hosted by Michael Levitis, the founder of Alpha PR Pro, to discuss how car leasing and selling a business is affected by the rise in interest rates.
Alpha Insider conducts interviews with experts in their respective fields to educate the public on Business FAQs. Keep reading to learn about how the car industry is hit after rising interest rates.
Let’s begin with the most obvious outcome of the rise in the interest rate.
- ● Loans for new and used cars could be more expensive due to higher interest rates.
- ● The average price of used cars is up 35.3% from a year ago.
- ● The prices for new cars are up 12.5% year over year, based on the data from theUS Bureau of Labor Statistics.Rising Interest Hits the US Car MarketWhile explaining the impact of the rising interest rate on the US car market, Lenny said -“The Fed rate is three and a half right now; the used car market, you could get it with a good credit score tier – about probably five and a half and up. But the new car market is different.”
Moving further, Lenny talked in detail about the new car industry and mentioned how the used car industry fell almost a percent every week during the last 12 weeks (at the time of the podcast). There is a fall in demand for luxury cars due to increased interest while customers are ready to buy a car between the range of $10,000 to $30,000.
As a lot of inventory is coming in, car retailers are also offering an instant lease credit to keep the sales figures moving. Therefore, Lenny said – “the interest rate is not going to affect us as much as the rebates are going to give us much better pricing and the selling price.”
When Will the Car Prices Drop?
It is one interesting question that most of you must have in your mind. As the rate of interest has increased, car prices are higher than the previous year for both new and used ones.
But since the market has already peaked in early 2022, motor business owner Lenny Komsky said that car prices are definitely going to go down as soon as the market cools. He also said the rise in car prices happens all of a sudden, but it comes down slowly and may take a while to enter the lower levels.
The car industry doesn’t seem to be that much affected from the seller’s end, as explained by Lenny Komsky during the podcast. But it is very much visible through the stats that currently, the prices for both new and used cars are higher than the previous year, and the increased interest rate on financing is causing low interest among customers to buy new vehicles.
Watch the full video on Alpha PR Pro and listen to Lenny Komsky to learn more about the impact of high-interest rates on the car industry.