ROCHESTER, N.Y. — If you’re in the market for a new car but waiting for interest rates to drop, you might want to reconsider. News10NBC’s Deanna Dewberry dives into why holding out for lower rates may not be the best strategy.

News10NBC’s Deanna Dewberry has a 14-year-old car and has been waiting for interest rates to come down. But experts told her not to hold her breath.

“I do expect the Federal Reserve will continue to reduce interest rates in 2025, but it’s going to be at a more modest pace. I expect three rate cuts from the Federal Reserve, but even that is contingent upon inflation showing some resumed progress toward that 2% target,” said Greg McBride, Chief Financial Analyst at Bankrate.

Despite improvements, the Fed’s 2% inflation target remains elusive.

McBride adds, “The impact of interest rates coming down has a pretty minimal impact on the monthly payment.”

For those driving older cars and considering a purchase, McBride explains, “The difference of half a percentage point on a $35,000 car loan is like $8 a month.”

McBride also notes, “Where interest rates could have a greater impact on what you could buy is if your credit had dramatically improved since you purchased your last vehicle.”

Let’s consider an example: Ted has a credit score of 650, placing him in the non-prime category. Financing $25,000 for a used car at a 14% interest rate, Ted’s monthly payment is about $582. A half-point interest rate drop would only save him $7 a month.

However, if Ted raises his credit score to 661, entering the prime category, his interest rate could drop to 9.6 percent, reducing his monthly payment to $526—a savings of $56 a month.

Raising your credit score is tough, Deanna gets it. But a local personal finance expert Jarrett Felton has given us some sure-fire method to improve your credit score in a month. To check out that story, click here.

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