Should I buy a car now or wait?

Buying a car continues to be a challenge amid record inflation, a shortage of support and rising interest rates. Since the start of the Covid-19 pandemic, prices for new and used cars have risen dramatically, leaving buyers with limited choice when it comes to finding affordable vehicles.

According to Kelley Blue Book, the average price of a new car hit an all-time high of $48,301 in August, up nearly 11% from a year ago. And with another Federal Reserve interest rate hike set to hit soon, a new car is quickly becoming a luxury few Americans can afford.

That said, there are still signs of hope for those looking to buy an affordable vehicle this year. Below, Select takes a closer look at how consumers can find the best deals without spending more than their budget allows.

Of course, the real question is: should you buy a car now or wait until 2023?

Zach Shefska, co-founder and CEO of YAA, a car buyer advocacy website, says you should wait to buy a car because prices are going to stay high due to low inventory.

According to a recent report from Cox Automotive, the number of new and unsold vehicles available remained stable at 1.09 million. While this is technically a small improvement on the 1.07 million vehicles available last year, the numbers are still a far cry from where they were before the pandemic, when there were easily 2.55 million vehicles available in July 2020 or 3.69 million vehicles available in July 2019. .

Unfortunately, Shefska says it’s going to be a long time before manufacturers can recoup that number, but there are a few ways to give yourself a little edge when buying your next vehicle if you just can’t wait any longer.

Track car prices aggressively before you buy

First, Shefska recommends doing thorough research on the car you like and looking for other similar vehicles recently sold in your area. The more research you do, the more confident you will feel when you walk into a dealership. You can find free tools to do this on websites such as YAA, CarGurus, and Cars.com.

If a dealer pushes back the desired price, mention the research you’ve done on other local, comparable deals. If they keep rushing you and giving you no wiggle room, consider taking the same search to another dealer and trying again there.

Buyers have leverage for some used vehicles

Shefska also says used car prices have fallen since the start of the summer and could continue to fall. This is because wholesale prices have come down, clearing the way for dealers to lower their prices as well. That said, there was a small spike in mid-summer, which brought the average used car price to just over $28,000 in July 2022.

Kelley Blue Book says real savings can be made when buying larger vehicles such as SUVs and pickup trucks, as consumers have moved away from less efficient vehicles amid recent fuel price spikes. gasoline. Savings on small compact cars, meanwhile, can be harder to come by.

According to Shefska, if you’re looking for a used vehicle, consumers are in the driver’s seat. He strongly recommends buyers track down vehicles that have been sitting in the lot for more than 60 days – the longer the car sits there, the more incentive the dealership has to sell it.

Show up at the dealership with financing or cash in hand

It is well known that car dealerships make big profits by linking their cars to loans on their premises. Walking into a dealership with financing from your local bank or credit union — or cash on hand — will give you much more leverage to negotiate the car’s price down.

To find an auto loan in your area, you should first check to see if your own bank or credit union offers them. It’s also best to shop around online to find a lender with the best available interest rate and repayment terms that work for you.

If you have good to excellent credit, consider working with one of the following lenders for your car loan, as they all offer a reasonable APR or annual percentage rate:

Select has detailed the pros and cons of using a personal loan over an auto loan when buying a car. You can check out Select’s personal loan marketplace to compare loans and find the one with the best rates and terms for you.

Before applying for a new car loan, check your credit score to see if you might qualify for a low-interest loan. You can also check and monitor your credit score with one of the following credit monitoring services:

Finally, if you plan to buy a car with cash, it might be a good idea to put your money in a high-yield savings account, which offers an above-average APY, so you can put your money to work for a bit. faster. Select ranked these accounts among the best:

As long as the car market continues its slow recovery, prices will still be strongly inflated. As a result, Shefska says if you don’t absolutely need to buy a car right now, it’s probably best to wait.

In the meantime, consider using public transport more or getting around via ride-sharing services if your budget allows. If you have to buy a vehicle this year, check your credit score and bank account first to see what you can afford without neglecting any other financial responsibilities.