3 things every car buyer should know about the latest Fed decision

Core Insights - The automotive industry is experiencing a record-setting pace in sales due to increased incentive spending by car companies in response to tariffs and the threat of them [1] - The Federal Reserve has cut interest rates for the second time in two months, which may influence auto loan rates indirectly [2][3] - The end of quantitative tightening (QT) by the Federal Reserve is expected to alleviate upward pressure on longer-term rates, including auto loans [5][6] Auto Loan Rates - The average auto loan rate has increased by 19 basis points in October and 32 basis points in September, with the September average at 9.41%, down 17 basis points year-over-year [10] - Cox Automotive predicts that auto loan rates will remain high through November, with fewer special offers contributing to this trend [11] - Consumers with credit scores of 760 or higher are seeing average rates of 5.5% on new cars and 6.9% on used loans in October [12] Federal Reserve Actions - The Federal Reserve's benchmark lending rate has been cut to between 3.75% and 4%, the lowest in three years, but is still considered restrictive [9] - The Fed's decision to end QT means it will maintain its balance sheet size by buying Treasuries and possibly mortgage-backed securities, which should help stabilize auto loan rates [4][6] - Future rate cuts by the Fed are anticipated, potentially leading to lower average auto loan rates by summer 2026 [13]