Interest Rage - InvestingChannel

Interest Rage

Proprietary Data Insights

Top Auto Manufacturer Stock Searches This Month

0 1 2
Rank Name Searches
#1 Tesla 767,609
#2 Nio 294,800
#3 Ford 89,575
#4 General Motors 28,376
#5 Toyota 7,231

Fed Up

Fed up with inflation, the Federal Reserve raised interest rates by 0.75% for the third time in a row. 

Here’s a fun look at what happened to stocks when the announcement hit:

Source: Google Finance 

Then there was a dead cat bounce. The type of move that lets day traders call it quits early. 

Made my money for Wednesday. Time to head to the beach. 

Or something like that. 

In the US – as well as Canada and Europe – the situation’s as clear as it is uncertain. 

Central banks might have to force a recession to tame spending, which will, as the theory goes, cool inflation. 

After two straight quarters of negative growth in the US, we might be on the brink of a contraction, if we’re not already in one. The Q3 data oughta tell the tale. 

At the household level, doesn’t matter much. You’re already feeling the effects of this insane in the membrane economic environment. 

Scroll with The Juice as we explain with some eye-opening numbers on just how much money you might be throwing away, and not just if you’re struggling to make ends meet. The well-off consumer is in relative peril as well.

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Interest Rage

Key Takeaways:

  • We know all about people struggling to make ends meet. 
  • However, there’s serious cash at stake for consumers doing well with money. 
  • Even if you’re sitting pretty, this might not be a great time to make a big purchase.  


The Juice came across data this week that made us wonder if we’re crazy. 

Data on the cost of a new vehicle. 

For example, meaningful markups on the most popular cars: 



We’re seeing a 10% markup on new cars across the board with the average pricing hitting a record $46,259 last month. 

Why would anyone buy a new car at these prices? The question making us question our sanity. 

And it’s not only the cost of the car that’s lifting cash from your pocket. It’s the cost to finance your new ride. 

The average interest rate on a new car loan hit 6.14% in August. That’s up from 5.23% in March. The difference in the cost of the loan between now and then is nothing to sneeze at. 

  • A 60-month loan on the average-priced car with $5,000 down and a 5.23% interest rate means a monthly payment of $783. Over the life of the loan, you’ll pay $5,719 in interest. 
  • Keep everything else the same, but increase the interest rate to 6.14% and your payment jumps to $800. Total interest paid soars to $6,761. 

In this equation, you could argue that a new car buyer today is throwing upwards of $1,000 away at these prices and this interest rate. 

Not much of a shock? 

Okay, running similar numbers on a mortgage might make you think twice about spending on big-ticket items in this environment. 

Dirty little secret. Mortgages are never cheap. 

When you actually look at how much interest you pay on a 30-year loan, it’s freaking scary. Even during the good old days. Like, say, at the beginning of 2020 when the median price of a home in the US was around $329,000 and the interest rate on a 30-year mortgage was 3.76%. 


Source: Bankrate

  • A $1,526 monthly payment and more than $220,000 in interest paid over the life of the loan. 

That’s how it looked nearly three years ago. 

Here’s how it looks today with the median at about $440,000 and the 30-year at 6.36%, as of midday Wednesday. 

Gulp. payments

  • Monthly payment is $1,215 higher and you’ll pay $326,470 more in interest over the life of a 30-year loan on the typical home. 

Does this equate to throwing $437,400 (the monthly payment increase over 360 payments) or so away?

Depends on your perspective. 

If housing prices continue to rise – over time – maybe it’s all good. 

Isolating the loan, you might have the opportunity to refinance sooner or later. We touched on this in Tuesday’s Juice.  

As always, your personal financial circumstances and overall outlook on your pocketbook and the broad economy dictates the spending decisions you make in what has been a whirlwind 2022. 



The Bottom Line: These are big numbers. They can be scary, even if you’re doing well with money.

At the very least, it makes sense to think about how your life might change by taking on these obligations, today, with prices and interest rates on big-ticket items at or near record highs. 

One way to look at it: Ask yourself if you’re biting off more than you can – or should – chew? 

Will you have to give up things you need or want in one area of life to buy that new car or become a homeowner? If so, can you deal with this? Or will you regret taking the plunge and not waiting for these things to become less expensive? 

On the flip side, will you regret not jumping in – and staying in your current house and car situation – if prices and rates only keep heading higher with no meaningful pullback for you to take advantage of? 

Tough questions for economically tumultuous times.

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