Unemployment Rates Fall to 8.9% – Are Interest Rates on the Rise?

The U.S. government today released an unemployment report with many positive signs for a recovering labor market, including a rise in payrolls of 192,000 – the unemployment rate now stands at 8.9%. While an economic recovery is something everyone wishes for, there could be a negative impact on interest rates for auto loans or mortgages. The Fed introduced about $600 billion into the money supply via Quantitative Easing II, and in order to control inflation, they would have to raise interest rates and allow the money to contract once more. This means that while you may now find employment since being unemployed, the interest rates on consumer goods like cars will also rise alongside it.

Factors Affecting Your Next Car Purchase

That’s a theory, but no one knows for sure where auto loan rates will go. There are still many factors that could affect your next car purchase. For instance, high gas prices could lead many to postpone buying new cars, causing manufacturers to offer more incentives and their own special interest rate programs. That could certainly drive up affordability. The Fed could decide to not raise interest rates at all too. At the moment, Fed Chairman Ben Bernanke is insisting that inflation is not a risk, and certainly not hyperinflation. But a growing economy is often met with growing interest rates, so it may be a good time to purchase a new or used car with cheap auto financing options if you have been in the market.

U.S. auto loan rates have been holding steady at an affordable amount since the Great Recession began, but no one knows how long they could last. Today’s jobs report is a good indication that a recovery is on its way, but those numbers could also be revised in a negative way a month later.