Car loan cost surge pressures manufacturers to reinstate discounts

Rising borrowing costs exacerbated by recent turmoil in the banking sector have sidelined some buyers in the US new car market, putting pressure on manufacturers to discount vehicles.

Cars have become increasingly unaffordable after shortages over the past two years forced consumers to pay at or above sticker prices. The Federal Reserve’s efforts to curb inflation have now driven the average interest rate on a new car or truck loan to 8.95 per cent, up from 5.66 per cent a year ago, according to Cox Automotive, which provides services to car dealers.