Default could impact borrowing, investments


Default could impact borrowing, investments

BOZEMAN, Mont. - If lawmakers cannot reach a deal, a default could have an impact far beyond the governments payments. We spoke to Frederick Maxted Monday afternoon. He is the owner of Group W Investment Management in downtown Bozeman.

"An actual default on the U.S. Treasury obligations is extremely unlikely," said Maxted.

His job is to guide people through investments such as bonds.

"You can buy 3-year treasury notes, 5-year treasury notes, 10-year treasury notes," said Maxted.

Maxted says even with the shutdown, and threat of a possible default, his advice to clients has not changed.

"I would recommend making no change to an investment allocation at this time," said Maxted.

Another industry that could feel the impact is automobiles. The problem lies with interest rates. If there is a hike, it could make all the difference in what car you drive off the lot. Right now, for those who have good credit rates, loans can range anywhere from 2.9 to 3.9 percent.

We spoke to Hal Rainey, one of the owners of Aspen Motors. He sat down with us to crunch the numbers on a $15,000 car.

"If the rates go up to 8.9 percent you would go from $268 to $310.65 so it's a substantial amount for a monthly payment," said Rainey.

That would be a little over $40 increase to a monthly payment. Rainey worries higher interest rates will make it tougher to close some deals.

"That will take some people out of the market," said Rainey.

But like Maxted, he says his advice is not wavering, and hopes people will continue to invest and spend as usual.

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