Carmakers that used 0% financing offers to boost sales at the height of the American auto boom are starting to abandon them as rising interest rates lift their own borrowing costs, Bloomberg reports.
The average interest rate on consumers’ new-car loans climbed to 5.7% in March, the highest since 2009 and up from 5% a year ago, according to Edmunds, an online resource for automotive information. Zero-percent offers fell to 7.4% of auto loans last month, down from more than 11% the prior year and the lowest share in more than two years, the car-market researcher says.
“Nobody wants to be the first one to go from zero to 0.9 percent, or from 0.9 percent to 1.9 percent, but you’re going to see zero no longer be the norm,” Jim Lentz, chief executive officer of Toyota Motor Corp.’s North American operations, said at a New York auto show last week. “That has to be pushed along. That will impact, marginally, some people getting pushed out of the market.”
