Federal Reserve Rate Hike Reinforces Trend of Longer Vehicle Ownership

As borrowing costs climb following the latest Federal Reserve rate hike, more Americans should consider keeping their vehicles longer, as new car investments and unexpected repair costs are a growing financial concern.

ST. PETERS, Mo., Sept. 18, 2026 /PRNewswire/ -- Following the Fed's quarter-point rate hike, average new-car loan rates are around 7%, while average used-car loan rates are about 7.5%, though the exact rate consumers receive depends on their credit profile, lender, and vehicle. CarShield is helping drivers protect one of their biggest investments by providing coverage that can help manage the cost of unexpected repairs and make long-term vehicle ownership more predictable.

"For many families, today's vehicle isn't just transportation, it's one of their biggest financial investments," said Nick Hamilton, CEO of CarShield. "As borrowing costs remain elevated, more drivers are choosing to keep the cars they already own. Our goal is to help give them greater confidence by making unexpected repair costs more manageable."

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Keeping Your Car Longer? Here's How to Prepare for Repair Costs

The current economic landscape has shifted the role of vehicle protection from a secondary consideration to a critical baseline defense asset. As the cost of new inventory and borrowing remains elevated, the strategy to prioritize vehicle preservation encourages owners to maximize the life of their current automobile vs. buying a new vehicle at a high interest rate. It is much more manageable to keep a low to no monthly car payment on an aging vehicle, as long as you have a vehicle service contract to help manage repair costs. Here are the benefits:

1. More Room in Your Monthly Budget: A paid-off or nearly paid-off vehicle can free up hundreds of dollars each month that can be directed toward:

• Savings or an emergency fund
• Paying down higher-interest debt
• Retirement or investment contributions
• Routine vehicle maintenance

2. Lower Total Cost of Ownership: Even if an older vehicle requires occasional repairs, those costs can be manageable with a vehicle service contract and may still be lower than:

• A new monthly loan payment
• Higher interest charges over the life of the loan
• Increased insurance premiums
• Depreciation on a new vehicle

3. Avoid Paying Interest: Higher interest rates mean borrowers may pay significantly more over the life of a loan. Keeping a vehicle you already own can eliminate or reduce those financing costs.

4. More Financial Flexibility: Without a large monthly payment, consumers often have greater flexibility to:

• Handle unexpected expenses
• Weather income changes
• Choose when to replace the vehicle rather than feeling pressured

5. Slower Depreciation: Most new vehicles lose value rapidly during the first several years of ownership. An older vehicle has already experienced much of that depreciation.

6. Greater Return on Maintenance: Investing in regular maintenance and timely repairs can extend a vehicle's life, allowing owners to get more value from an asset they've already paid for.

Reliability is no longer just a mechanical concern; it is a primary metric for household financial health. When a vehicle surpasses its factory warranty, owners often feel trapped between the threat of a four-figure repair bill and the burden of a new loan at peak market rates. CarShield addresses this by offering help against sudden cash outflows, allowing families to maintain their current transport assets with total financial transparency.

As more drivers choose to keep their vehicles longer, having a plan for unexpected repairs can help you stay on the road with greater confidence and avoid the financial strain of surprise repair bills.

Frequently Asked Questions

1. Is it better to keep my current car or buy a new one when interest rates are high?

The right choice depends on your vehicle's condition, repair history, budget, and financing options. When borrowing costs are higher, many consumers compare the total cost of replacing their vehicle; including monthly payments, interest, insurance, and depreciation with the cost of maintaining the car they already own. If your vehicle is reliable and well maintained, keeping it longer may be a cost-effective option for some drivers. Make sure you have a CarShield plan to help with the protection. 

2. How do higher interest rates affect car buyers?

Higher interest rates can increase the cost of financing a vehicle, which may lead to higher monthly payments and more interest paid over the life of an auto loan. As financing becomes more expensive, some consumers choose to delay purchasing a new vehicle and adding a protection plan from CarShield to keep their current vehicle longer while evaluating their transportation budget.

3. How can I prepare for unexpected repair costs if I plan to keep my car longer?

Regular maintenance is one of the best ways to help extend the life of your vehicle. Many drivers also choose to add a protection plan from CarShield to help with repairs costs after the manufacturer's warranty expires. Planning ahead can make long-term vehicle ownership more predictable and help reduce the financial impact of unexpected breakdowns.

CarShield is a leading provider of vehicle service contracts, helping drivers protect themselves from the high cost of unexpected covered repairs after their manufacturer's warranty expires. CarShield has helped protect more than 3 million vehicles, while its administrators have paid more than $1 billion in covered claims, giving drivers greater confidence on the road. CarShield offers flexible month-to-month coverage options designed to fit any budget and driving needs, with plans available for most vehicles. Benefits include 24/7 roadside assistance, courtesy towing, and rental car options. CarShield administers its own claims to insure premium support and customer service. For more information and full contract details, visit CarShield.com

SOURCE CarShield