Inflation, high-interest rates, and a microchip shortage that brought auto manufacturing to a grinding halt are just a few factors creating an incredibly tough market for anyone looking to buy a car. Experts say it’s unlikely the market will swing in favor of the buyer again anytime soon.
If you’re in the market for a new (or used) car, you may need to approach the process differently than in the past. These tips will help you get the best possible deal in a challenging market.
Tips to find the car you want at a decent price
- Think about financing before you start shopping. If you have savings, buying a car outright is always the cheapest option. However, most consumers choose to finance their purchase, paying less upfront but more in the long run since you’ll need to borrow money and pay interest on your car loan. Whichever route you take, start by figuring out your budget. Decide how much you can afford to set aside for monthly car payments. Talk to your bank about getting preapproved for an auto loan. Not only will this give you some bargaining power when you are at the dealer, but you’ll also be able to compare dealer financing to find the lowest interest rate on your loan.
- Don’t get underwater. Many cars are still selling at prices over their sticker value. Consumers may be tempted to take out a bigger loan when it seems all vehicles sell for a premium. The problem is that cars are depreciating assets, and their value drops significantly as soon as you drive them off the lot. Without a decent down payment, you could quickly end up upside-down (a.k.a. underwater) on a loan, owing more than your car is worth. If your car gets totaled in a wreck or stolen, you could be left owing money on a vehicle you no longer have. If you can’t afford a larger down payment, consider purchasing gap insurance, which would cover the difference in the event of a severe accident.
- Don’t count on discounts or even haggling. In the past, year-end deals and bartering to get a lower price on a car were part of the sales process. With limited inventory, getting a deep discount from a dealer trying to clear off excess inventory isn’t likely. On the bright side, your used car trade-in is likely worth a little more than it would have been pre-pandemic. Consider using that for a little extra leverage to strike a deal.
- Do your research and try to be flexible. Before you set foot on a dealership lot, know which cars will fill your needs and their current market value. Look at several different dealerships’ websites to view their inventory and check their prices. When you’ve settled on a particular model or two, decide which feature package you want before a salesperson convinces you to need the premium package. Keep in mind that flexibility is critical. If you have a few color options in mind or are willing to consider two different model cars, you’ll have a better chance of finding a vehicle you like.
- You can order a car, but you’ll have to wait. Another option with fewer cars on dealers’ lots is to request a car customized to meet your needs. If you go this route, know that you’ll probably wait at least six weeks to get the car, or much longer if it’s a model in high demand.
- Look farther afield. If you’re having trouble finding a car locally, consider expanding your search geographically. Looking outside of your city will give you more options but remember; you may need to travel to see the car and take it for a test drive.
- Negotiate if you find a car you like. Budgeting, getting preapproved for financing, and researching ahead of time are all critical. Turnover on dealership lots is fast, and you must be ready to act. If you find a car you like and don’t buy it immediately, another shopper could swoop in before you make up your mind.
- Consider a used vehicle. Consider buying a used car if a new car doesn’t fit your budget. Certified pre-owned cars might be a good option since they have warranty coverage and other “like new” perks. However, be willing to pay a little more for this option. Whether you buy from a dealer or a private seller, always do plenty of research and inspect the car carefully before you seal the deal.
- Buy your lease. If you leased a car before all the supply disruptions started, chances are the end-of-lease purchase cost, set when you signed the contract, will be well below the current market price. If this is an opportunity open to you, take advantage!
- Be patient. Yes, it’s a competitive market, and you should be ready to pounce if you find a decent deal. Don’t let a sense of urgency or desperation cause you to accept a bad deal or fall for a scam. You may need to compromise to a degree, but never overlook your primary goal of buying a vehicle that serves your needs and will get you around for years to come.
For more information
Visit the BBB Auto Resource Center for more tips and advice on buying, selling, renting, and repairing your vehicle. Find a car dealer near you. Check out BBB’s tips for buying a car online.
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