The Federal Reserve raised interest rates for the fourth time this year by a quarter point lifting the prime rate for federal funds to 2.5 percent. That increase has an impact on the overall interest rates, including those on car loans, which continue to edge upwards. The higher rates combined with longer term loans means that buyers will be paying more interest overall in the days ahead. However, the Fed signaled that it will take a pause in future hikes in early 2019.

While higher rates have yet to have a major impact on car sales (the industry remains on track to crack the 17-million level for the fourth straight year), there are concerns over higher rates and rising sticker prices as having an adverse effect as we head into the new year. In fact, analysts believe that a slowdown, which was predicted for this year, will begin early next year.

Higher rates will also mean that 0-percent financing, which is having a brief comeback during a few holiday sales events (Ford is offering a wide range of these deals currently), will likely disappear in 2019. Look for subsidized rates in the 0.9 to 2.9 percent range at best.

According to Bankrate.com, 5-year new car loans are averaging 4.96 percent, up six basis points in a month from 4.90. Shorter 4-year loans are slightly less at 4.90 percent, but also reflect a six-basis-point gain during the month. For 3-year used vehicle loans, the rates remained unchanged at 5.53 percent.

Inventories grow

Just as makers are pushing hard on their annual holiday sales events comes news that vehicle inventories are up over 4 million units for the first time in seven months, according to Automotive News. That translates into a 73 days’ supply, up over last year’s number of 71 days. Days’ supply is the number of days it would take to move all cars currently in inventory at the current sales rate.

While the number is down slightly from November’s 76 days’ supply thanks to the quickening pace of vehicle sales due to various promotions, the total number of vehicles on the ground grew by over 85,000 vehicles in November.

Subaru remains the overall champ in keeping its stocks in check with just 28 days’ supply. Audi was next best at 46 days, followed by Mercedes-Benz and Land Rover with 47 days each. BMW rounded out the top five with just 49 days’ supply.

Fiat has the highest inventory by this measure thanks to ample vehicles in stock and a low sales rate which translates to 149 days’ supply. Volkswagen is reported to have a 132 days’ supply, followed by Buick at 126, Mitsubishi at 121 and Ram with 107.

Among specific models, it’s interesting to note that supplies of the recently redesigned Lincoln Navigator remain tight at just 49 days’ supply, Ford has an abundance of Ford Expeditions in stock, some 22,100 units representing a 132 days’ supply. Ford is currently promoting 2018 Expeditions with a $449 per month 3-year lease with $5,829 down, as well as a 0-pecent finance deal with $1,250 cash back.

Hyundai’s holiday cheer

Hyundai is also pushing holiday sales by offering a wide range of incentives on brand new 2019 models including those recently introduced to the market. Among the deals is a $239 per month 3-year lease on the all-new 2019 Santa Fe with just $2,299 due at signing. Those looking to buy can qualify for a $1,250 rebate and 1.9 percent financing. The all-new subcompact 2019 Hyundai Kona is eligible for a $500 rebate and 2.9 percent financing or a 3-year lease at $229 per month with $1,899 down.

On its carryover models like the 2019 Sonata, Hyundai has a $750 rebate and 0.9 percent financing or a $209 per month 3-year lease with $2,399 up front. The compact 2019 Elantra can be leased for $189 for three years with $2,199 down or purchased with a 5-year 1.9-percent loan with $500 cash back. The 2019 Tucson has a similar finance deal and a monthly $239 lease for 3 years with $2,099 due at signing.

Nissan buyers get kicks from Kicks

Subcompact crossovers are a growing segment and while their appeal is often their low sticker prices, Nissan has been surprised by the number of buyers who are opting to go with higher trim levels than the base model. The company has discovered that more purchasers are specifying the upmarket SV and SR trims over the entry-level S.

“You’d expect a vehicle that starts at $17,990 to sell in that value range up to the midrange,” Billy Hayes, Nissan’s vice president for regional operations, told Automotive News. The Japanese automaker is also discovering in addition to taking the higher trim levels, buyers are also snapping up the two-tone paint option on the SV and SR as well as checking the box for the Premium trim level. That package includes the high-end Bose sound system with the headrest-mounted speakers that adds another $1,000.

“This one has bucked the trend out of the gate,” Hayes said in the trade paper “It’s had us go back to our assumptions and build more of the SRs, SR Premiums and two-tone paint. We’ll test it until we feel like we’ve built the right amount and we’ll keep it that way.”

The rundown

Hyundai has released pricing on its all-new 2019 Hyundai Kona EV, which boasts a range of nearly 250 miles per charge. With the federal $7,500 tax credit, it comes in at $29,995.

Connoisseurs of classics will probably get a kick of the coach doors on the 2019 Lincoln Continental 80th Anniversary Edition. The price is expected to be more than $100,000.

Toyota is touting the all-wheel drive capability of its 2019 Toyota Prius AWD-e model. We get behind the wheel in this First Review.

In the market for a new car? Explore these useful tips on how to get the best deal: 

Top 10 deals of the month

Kelley Blue Book’s Complete Guide to Incentives

All you need to know about leasing

Which dealer services are right for you

What you need to know about conditional rebates

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