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Fed Cuts Interest Rate to Zero - Good News for Borrowers? #5377817 03/16/20 12:45 PM
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john_pifer Offline OP
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Good news for those shopping for auto loans?

Sunday, March 15, the Fed cut the benchmark interest rate to zero.

I was wondering if any of our financial gurus here could shed some light on how this could affect auto and other consumer loans.

Ive often heard about the Fed changing the benchmark interest rate and wondered what effect this has on consumer loans. I’m honestly not that educated on this.

I’m assuming rates will drop. But how soon?

When I borrowed the money to buy my new WRX in 2016, I was able to secure 1.99% @ 72 mos from my credit union here in Nashville. Recently when my sister and BIL were in the market, I checked, and rates were up a bit from that - more like around 3-3.5% were the best I could find.

So, what will the effect be, and how soon will rates for consumer loans drop as a result of this?


07 Tacoma V6 - M1 EP 5W-30, Fram Ultra, 10K OCIs, 225K
18 Civic HB 1.5T 6MT (Fiancee's) - VME 0W-20, OEM filter
07 Yamaha R1 - Rotella T6 5W-40, Bosch 3300
07 Yamaha YZ-250, Klotz, Rotella

Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377825 03/16/20 12:52 PM
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BMWTurboDzl Offline
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On an inflation adjusted basis money has been essentially "free" for a decade.


“It took untold generations to get you where you are. A little gratitude might be in order. If you’re going to insist on bending the world to your way, you better have your reasons.”

435i
Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377842 03/16/20 01:06 PM
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Hombre909 Offline
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To answer your question, yes. Rates will bottom out but shop for the best loan as each lender will vary with what they charge.

Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377889 03/16/20 02:08 PM
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Donald Offline
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This gives the fed no maneuvering room. It seemed a reaction to pressure rather than the right thing to do.


2015 Ford F-250 w/Powerstroke
2016 Subaru Crosstrek CVT (wife's)
Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377895 03/16/20 02:12 PM
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zmelli Offline
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Well nobody bought the 30yr notes, bad news. This means no 30yr notes to back up any loans, so this is not very good news.


06 Acura TSX 6-Speed/ASM 0W40/js C809j
93 Honda Accord 0W-40Edge/Micro T7316

"Dr House - the concept you have about me won't change who I am, but it will change my concept of you"

Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377897 03/16/20 02:20 PM
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zmelli Offline
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Originally Posted by john_pifer
Good news for those shopping for auto loans?

Sunday, March 15, the Fed cut the benchmark interest rate to zero.

I was wondering if any of our financial gurus here could shed some light on how this could affect auto and other consumer loans.

Ive often heard about the Fed changing the benchmark interest rate and wondered what effect this has on consumer loans. I’m honestly not that educated on this.

I’m assuming rates will drop. But how soon?

When I borrowed the money to buy my new WRX in 2016, I was able to secure 1.99% @ 72 mos from my credit union here in Nashville. Recently when my sister and BIL were in the market, I checked, and rates were up a bit from that - more like around 3-3.5% were the best I could find.

So, what will the effect be, and how soon will rates for consumer loans drop as a result of this?

Problem is more people are going to need to give their car back to the bank if they get laid off. Not sure how all this is going to pan out.


06 Acura TSX 6-Speed/ASM 0W40/js C809j
93 Honda Accord 0W-40Edge/Micro T7316

"Dr House - the concept you have about me won't change who I am, but it will change my concept of you"

Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377921 03/16/20 02:46 PM
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supton Offline
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I thought most of the 2.9% APR and lower auto loans were through the banking arm of the manufacturers. They can afford to make nothing on the loan if it moves units and keeps the production line going and keeps them in the green. That said, I'm starting to think we'll see those again, and soon.


2011 Toyota Camry, base, 2.5L/6MT, 203k, hers
2010 Toyota Tundra DC, 4.6L/6AT, 158k, ours
1999 Toyota Camry LE, 2.2L/4AT, 223k, his
Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: supton] #5377950 03/16/20 03:50 PM
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Malo83 Offline
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How does this affect credit cards? confused

Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377955 03/16/20 03:54 PM
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Mad_Hatter Offline
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This was a coordinated rate cut with other central banks signaling a growing fear that the global economy is headed towards a recession.

Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377958 03/16/20 03:59 PM
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Miller88 Offline
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It's just the cost of the money that you borrow. The banks will still have interest so they can keep making money. I expect they are going to see a ton of defaulting.

Last edited by Miller88; 03/16/20 04:00 PM.

18 Forester 2.5I 6M
00 Jeep XJ
01 F-350 4x4 5M
Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377968 03/16/20 04:22 PM
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csandste Offline
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Got more into cash in 2018-- still enough stock funds in there to drop thirty or forty thou a day (didn't even look today, enough stress). I do have a number of low interest CD's coming due. I'm sure they'll be paying negative interest like Europe when reinvested. Have paid off mortgages on two of my three properties. Last one is a floater running about 4.5 percent annually. Gonna pay the last seven thou off on that in the next month or two. Guess Dave Ramsey would be proud.


2017 Kia Soul+ Valvoline Daily Protection 5w30+ a bit of Harvest King syn 5w30-- 75,000 miles
Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: Donald] #5377977 03/16/20 04:37 PM
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Vern_in_IL Offline
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Originally Posted by Donald
This gives the fed no maneuvering room. It seemed a reaction to pressure rather than the right thing to do.


Negative interest rates. (GULP!)

Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5377995 03/16/20 05:09 PM
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CKN Offline
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You are not going to have people borrow money in a declared pandemic regardless of the interest rates. Don't see how this was a great move-honestly.

Last edited by CKN; 03/16/20 05:11 PM.
Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: john_pifer] #5378005 03/16/20 05:31 PM
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miden851 Offline
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it is same idea as back in 2008; it takes the time to reap its fruits... see you 1 year!


2008 Mazda6i GT; @241K miles
2016 Honda CR-V EX-L; @56K miles
Re: Fed Cuts Interest Rate to Zero - Good News for Borrowers? [Re: Vern_in_IL] #5378011 03/16/20 05:35 PM
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Originally Posted by Vern_in_IL
Originally Posted by Donald
This gives the fed no maneuvering room. It seemed a reaction to pressure rather than the right thing to do.


Negative interest rates. (GULP!)

That would send the market tumbling. It would be the Feds admitting we're headed to a recession. And besides, negative rates has a mixed history of working/not working. We need to face it, this event is gonna change life and habits for a long time and the markets globally will reflect that.

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