As interest rates continue to climb, car buyers are taking notice. And many of them are objecting to rates offered by dealerships.
Most customers who have been questioning the rate are either unaware of the interest rate hikes, F&I advisers say, or don't understand how they affect their monthly payments.
When interest rates on vehicle loans could be 2 percent or lower -- a frequent occurrence during the low-rate period of recent years -- there wasn't much reason to object. Today, however, the average interest rate on new vehicles is 5.8 percent, according to Edmunds. Though that is still historically low, some consumers are speaking out.
Many of today's vehicle buyers are 32 years old or younger, and they are used to having low interest rates, said John Tabar, director of training for United Development Systems. While rising rates likely will encourage consumers to come to the market before they climb even more, some buyers still object.
"Now, if someone gets quoted a 4 percent rate or higher, they're like, 'Whoa, wait a minute. That seems kind of high,' " Tabar said.
The Federal Reserve benchmark interest rate was between 0.5 and 0.75 percent just two years ago. Now, it's between 2 and 2.25 percent and expected to rise.
So how can F&I managers prevent the hikes from affecting their business? Explain the increases to customers, help them shop around and focus on F&I product sales, trainers and a dealer say.