Dealers Will Feel Profit Pinch but Buyers Should Shrug Off Higher Loan Rates, Say Economists

Diane Swonk

Econ­o­mists pre­dict that the recent inter­est rate hike will start a trend that squeezes deal­er prof­its. They say deal­ers will order few­er vehi­cles in order to reduce floor­plan­ning costs. But it is also believed that con­sumers are more like­ly to shrug off the high­er rates as rebates and incen­tives shield them from the increased costs. Ana­lysts point out that the recent .25% hike adds just $2 per month to a $20,000, 60-month loan.