The average age of a U.S. car stands at a record-high 11.5 years—and the prospect of higher interest rates later this year that may increase financing costs may not do much to reverse the this trend.
Although the timing of a Federal Reserve interest rate increase remains uncertain, most analysts expect it to happen before the end of the year—and that may prop up other rates that have already been creeping higher in recent months.
If that happens, the math for many car consumers becomes simpler: possibly higher interest rates on loans for new cars means that buying cheaper used vehicles—and getting more mileage out of current rides with repairs and new auto parts—might be the better value proposition. And that could benefit investors who invest in companies focused on the used-car market.
Ahead of the widely anticipated Fed rate hike, we’re making Used Car Tune-Up our Motif of the Week. Today through Friday, you can trade the motif commission free.
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