To the average consumer, what influences interest rates is nearly as mysterious as what a politician really means when he talks. No one can really interpret politico speak for you, but here are a few specific things that are considered when a bank sets interest rates, whether they be for auto loans, home loans, or credit cards.

Mortgage rates are tied to the 10 year treasury notes. That makes them less volatile than other loan rates, which is nice if you are thinking about buying a house in the near future. The rates are really good right now, and many people are trying to refinance their homes at a lower rate. Unfortunately, they still have to overcome the hurdle of getting their credit approved by a lending institution.

Credit cards rates, on the other hand, are tied to the prime rate set by the Federal Reserve. The Fed recently announced that it will leave rates alone for a few more years, so credit card rates should stay stable during that period. If your credit card company raises its rates, they are simply increasing their profit margin. It is not a sign of a government move at this time.

Federal student loans are set at 6.8% interest. Private loans from a company like Sallie Mae, however, are not set in stone. They are tied to the London Interbank Offered Rate. This is the interest rate that large international banks are charging each other for loans. Private loans are bouncing between 2.25% and 10.125% right now.

Car loans are usually based on the 3 and 5 year Treasury notes. The rates on those notes are good at this time, so interest rates on vehicles are low right now. In fact, some news outlets have been reporting that auto loan rates are the lowest they have been since 2007. But don’t get too excited. The flip of side of the coin is this: it is not as easy to get approved for car loans as it used to be.

Many people panicked when the U.S credit rating was downgraded. Rightfully so in a normal market. At this time there is a lot of uncertainty in the global market, which is allowing interest rates to remain low. Be sure to shop around for financing in order to take advantage of the best deals out there. Right now it is a buyers market in the credit industry.

Blake Lundy has been covering finance, credit, and lending topics for years. If you live in the Tri-State Area and need to get a car financed at an affordable rate, he recommends you try Auto Loan in New York or Car Loan in New Jersey. These services may be able to help you get approved for the auto loan you need.

6506502