Rising interest rates mean higher loan costs when you go to buy a car. Monthly payments already average $650

Financing the purchase of a car is going to get more expensive because of elevated prices.

With the Federal Reserve raising its key interest rate by half a percentage point on Wednesday, borrowing costs are poised to head higher on a variety of consumer loans, including those for autos. This is the Fed's largest increase in more than two decades.

In the past, interest rate hikes didn't affect the new car market as much as they do now.

Great Resignation is still hot but may not last.

This is the biggest rate hike we have seen in over 20 years, so there may be a small impact, but it will likely reinforce the new vehicle buyer base of higher income shoppers.

The used car market is likely to feel the bigger effect.

This increase will only make this market more expensive, and buyers will be forced to sit out due to affordability or buy an older vehicle to keep payments within a digestible range.

According to the most recent data from the U.S. Bureau of Labor Statistics, consumers have been forced to deal with higher new-car prices due to the ongoing computer chip shortage. The average price of a used car has increased from a year ago.

According to an estimate from J.D. Power and LMC automotive, the average amount paid for a new car is $45,232. The average monthly payment is close to six years. The term for dealer financing is 70.2 months and the average rate is 4.7%.

The average paid for a used car is more than $30,000. Over 70.7 months, the average monthly payment is $544.