As inventories creep back up, new-car dealers finally show more vehicles. Due to a number of factors, including inflation, higher interest rates and a year of scarcity of new cars, the demand for automobiles has decreased. Even so, certain models are still hard to find. It’s important that those who need to purchase a new vehicle take the time to do so carefully. You may still have to pay thousands more than the suggested retail price of the manufacturer to get the vehicle you want. A little bit of research and flexibility can help.
We has been following the market for a few years now and is well aware of the crazy ride that consumers have experienced. We rely on a secret buyer team to buy between 40 and 50 new cars per year to test out the most popular trims and models. We have been unable to keep up with the demand for new models and have had to wait a long time to get them. Since the start of 2023 we have bought dozens of new vehicles, including the Jeep Grand Cherokee 4-wheel drive, and the Toyota Prius. Last year we paid thousands more than the MSRP for many cars. This year, however most of our purchases have been close to list price.
The shortage of new cars, which has been plaguing buyers for some time now, is primarily due to the global pandemic-related scarcity in microchips required to build them. The problem persists, but things are slowly improving. Used cars are still more costly as a result of the pandemic. The Bureau of Labor Statistics reports that, despite a drop of more than 5.6 per cent in used car prices since last year and a 40 percent increase over February 2020 (just before the pandemic) they are still significantly more expensive.
As the new-car inventories improve, manufacturers will offer more incentives to attract buyers. The principal of Triple Double Automotive – a company that tracks industry trends – says most manufacturers are now offering leasing and financing deals, not cash incentives. However, a manufacturer-subsidized interest rate on a new car could–for a qualified buyer with good credit–make that a more affordable option than an expensive used car financed by a higher-interest loan.
Stormy Weather
Having patience and being prepared to buy when you find something that you like is often the key. A recent report by Cox Automotive shows that manufacturers are prioritizing expensive luxury vehicles. The increasing sales of these cars have driven the average new car price higher. There are still affordable models.
“It is a good idea for you to concentrate on the model that you want and know all your options and costs.” “Do your homework. Find out the difference between dealer cost and MSRP.
Be prepared to accept the fact that in this market prices are not as negotiable. You’ve already won the first half of the battle if you can find the car that you want for a fair price and with favorable terms on financing or leasing.
In this difficult market, our main recommendation to buyers is to move quickly and negotiate with an informed perspective. This can mean the difference between a fair price and no deal.
Prearrange financing.
Calculate your monthly budget and apply for financing based on the amount you can afford. Before you visit a dealer to view cars, it’s a good idea for you to arrange financing through your credit union or bank. This will give you a benchmark against which to compare dealer financing terms, which might or may not be good. Dealer financing can benefit from manufacturer subsidies, which allow the dealer lower interest rates than what you could get through your bank. If you are looking to buy a car that’s in high demand, having financing available will give you an advantage.
Do not borrow too much.
Consider the value of your Kia Telluride if you bought it 16 percent above MSRP. If you bought an SUV for $15,000 over the MSRP in three years but paid $8,000 more than that this year, you would have spent $23,000 for it. Overpaying for new cars will likely compound your losses in the long run.
It’s the same for a car that is almost as expensive as when it was brand new. If you’re going to lose value in the next few years, you don’t want a loan for a car. Otherwise, you could end up under water on your loan. This means that you will owe more on the loan than the car’s worth over a long period of time.
Check out what’s on offer.
You may not find the exact car you want at the dealer near you if you are shopping for a brand new vehicle. You can check the dealer’s website or give them a call before you go to see what they have. It may be necessary to look at multiple dealers in order to find something similar to what you are looking for.
Think about an EV.
In 2022, when gasoline prices spiked, the demand for EVs spiked. EV availability is more plentiful now that the prices have dropped and more models are on the market. This could make it easier to get a good deal.
Extend your geographical search.
Try sellers in other areas if the dealers near you don’t carry the vehicle you are looking for. But be careful not to cast your net too far. Before signing any sales or lease contract, you should be able test drive the car. This is especially true for used vehicles. The market is so hot right now that you might not find the car you want if you need to travel a long distance to see it.
Buy something reliable.
You should keep your car if you have to pay more for it than normal. Consult ratings and reviews to ensure you purchase a reliable car that will not cause you any problems in the future.
Compromise to a degree.
Even if you find the car you are looking for, it may not include all the features that you wanted. You should decide which features are most important to you and whether the vehicle does not have all of them. In terms of price, the largest increases have been seen in large SUVs and pickup trucks, while smaller cars like sedans, hatchbacks and front-wheel drive vehicles have experienced smaller price increases.
Consider your trade-in.
Buying a car with improved fuel efficiency, updated safety features or even more comfort and style may be a compelling reason to purchase a new vehicle. You may be able leverage the value of your trade-in or sold car against the higher price of a new vehicle.
You should be aware that the value of used cars is falling, so your car may not be worth as much as you owe. It’s better to keep what you already have.
