When it comes to car loans, money is cheap — historically cheap.
Yogesh Mathur discovered that when he was in the market for a minivan for his baby-on-the-way. To keep his monthly bill reasonable, the Wheeling, Illinois, software engineer figured he would have to come up with a large down payment. Instead, Mathur got money for free: a no-interest, 60-month loan from Toyota Motor Corp. (7203) to purchase a $27,683 Sienna minivan. Mathur figures the free financing is saving him $1,000 to $3,000.
“It’s great,” Mathur, 32, said in a telephone interview. “I didn’t have to empty out my pockets just before a new baby is coming.”
Banks, bolstered by loose monetary policy, are charging U.S. consumers the lowest interest rates on new-car loans since the Federal Reserve began surveying them in 1971. Attractive rates helped spur a 9.5 percent jump in light-vehicle sales last month and maintained the fastest pace since the U.S. government’s “cash for clunkers” program three years ago, according to analysts surveyed by Bloomberg.
In addition to Toyota, General Motors Co. (GM), Ford Motor Co. (F), Chrysler Group LLC and Nissan Motor Co. also are offering zero- percent financing on some models, according to Edmunds.com.
“There’s no question that the quantitative easing and the pressure on interest rates has helped the industry,” said Paul Ballew, chief economist at Dun & Bradstreet in Short Hills, New Jersey. “It’s absolutely breathtaking to think about not just zero-for-60 programs, but just base interest rates. It’s insane.”
(read more at Bloomberg.)