The Federal Reserve raised the federal funds rate by a quarter point last week. This will only slightly impact car buyers' monthly payments, according to one economist.

But interest rates will keep rising. Diane Swonk, chief economist for Bank One in Chicago, predicts a 1.75 percent increase by July 2005, reported Automotive News.

"We're going to see much higher interest rates a year from now, and the ability to finance a car will be undermined a bit," said Swonk.

Incentives, however, are helping customers faced with rising payments. Jesse Toprak, director of pricing and market analysis for Edmunds.com, predicts that incentives will continue through next year because of high inventories.