All about interest rates
Just a few weeks ago special lease and cash back offers were available on some of the hottest hybrid cars. Even the Toyota Prius qualifed for as much as $500 cash back. However, $100+ oil and an earthquake-caused auto supply shortage has squashed most of those deals.
Eventually, however, supplies will increase and gas prices will probably pull back. Consequently, cheaper hybrid prices might be down the road, but will rising interest rates squash those price declines?
While interest rates are expected to stay at about 3 — 4 percent for top credit scores — versus 7 — 8 percent — through the rest of this year, higher interest rates are almost inevitable if the economy continues to creep out of recession according to many economists. As a result, even if hybrid prices do drop a bit as supplies increase or demand decreases, higher interest rates might offset this difference.
And one has to ask, are gas prices really going to decrease? How much? When?
If gasoline prices do decline, future spikes still seem inevitable based purely on the ongoing uncertainty and history of the Middle East and North Africa. However, even if stability is reached in this corner of the world and gas prices recede, cheaper gas will simply fire up the global economy, including in the BRIC countries that will push demand higher than ever.
One way or another, significantly cheaper gas prices seem less plausible than higher gasoline prices.
Consequently, if $3.50 — 4.00 gas is the new norm, with occasional spikes higher, then demand for many hybrids could keep prices on the higher end for years. However, now might offer the best interest rates possible for many car buyers.