Should I buy a car now or wait?

Buying a car remains a challenge amid record-high inflation, scarcity of support and rising interest rates. Since the start of the Covid-19 pandemic, new and used car prices have risen dramatically, leaving buyers with limited opportunities to find affordable vehicles.

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

However, there are still some 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.

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How to strategically buy a car in 2022

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

Zach Shefska, co-founder and CEO of YAA, an advocacy site for car buyers, says you should hold off on buying a car because prices will remain high due to low inventory.

According to a recent report by Cox Automotive, the number of new and unsold vehicles available remained constant at 1.09 million. While technically this was a small improvement over last year’s 1.07 million available vehicles, the numbers are nowhere near where they were before the pandemic, when July 2020 was easily 2.55 million vehicles or July 2019 3, 69 million vehicles were available.

Unfortunately, Shefska says it will be a long time before manufacturers can match that number again, but there are several ways to give yourself a small edge when it comes time to buy your next vehicle if you just can’t take it anymore can wait.

Aggressively track car prices before you buy

First, Shefska recommends doing thorough research about the car you like and looking for other similar vehicles that have recently been sold in your area – the more research you do, the more confident you’ll feel walking into a dealership. You can find free tools for this at sites like YAA, CarGurus, and Cars.com.

If a retailer is pushing back your desired price point, mention the research you’ve done on other local and comparable offerings. If they keep pressuring you and don’t give you any wiggle room, consider taking the same research to another retailer and trying again.

Buyers have control over some used vehicles

Shefska also says used car prices have been falling since the start of the summer and could fall further. That’s because wholesale prices have dropped, paving the way for merchants to lower their prices as well. However, there was a small spike in mid-summer that brought the average used car price to just over $28,000 in July 2022.

Kelley Blue Book notes that real savings can be made when purchasing larger vehicles, such as SUVs and pickups, as consumers have shifted away from less fully efficient vehicles given recent jumps in gas prices. Savings on smaller compacts, meanwhile, can be harder to find.

When you’re in the used car market, Shefska says consumers are in the driver’s seat. He urges buyers to track vehicles that have been in the lot for more than 60 days — the longer the car is there, the more incentive the dealership has to sell it.

Come to the dealership with financing or cash payment

Car dealerships have been known to make huge profits by pairing their cars with loans on their premises. When you get to a dealership with financing from your local bank or credit union — or cash — you have a lot more leverage to negotiate the price of the car down.

To find a car loan in your area, you should first check if your own bank or credit union offers one. It’s also best to shop online so you can find a lender with the best rates available 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 APR:

Select has detailed the pros and cons of using a personal loan versus a car loan when buying a car. You can visit Select’s Personal Loan Marketplace to compare loans and find the one that offers the best rates and terms for you.

Before you apply for a new car loan, check your credit history to see if you qualify for a low-interest loan. You can also check and monitor your credit score using any of the following credit monitoring services:

Chase Credit Journey

  • Costs

  • credit bureaus monitored

  • Credit scoring model used

  • Dark web scan

  • Insurance against identity theft

CreditWise® by Capital One

Information about CreditWise has been independently collected by Select and has not been verified or provided by Capital One prior to publication.

  • Costs

  • credit bureaus monitored

  • Credit scoring model used

  • Dark web scan

  • identity insurance

American Express® MyCredit Guide

  • Costs

  • credit bureaus monitored

  • Credit scoring model used

  • Dark web scan

  • Insurance against identity theft

advantages

  • Score Goals allows you to set a desired credit score and receive personalized recommendations on the best ways to improve it
  • Has a credit score simulator

Disadvantages

  • Only monitors a Schufa report
  • No dark web scans
  • Does not offer insurance against identity theft

Finally, if you’re planning to buy a car with cash, it may be wise to put your money in a high-yield savings account that offers an above-average APR so you can grow your money a little faster. Select ranked these accounts as some of the best:

LendingClub High-interest savings

LendingClub Bank, NA, member of the FDIC

  • Annual Percentage Return (APY)

  • minimum balance

    No minimum balance requirement after $100.00 to open account

  • monthly fee

  • Maximum Transactions

  • Excessive transaction fee

  • overdraft fees

  • Offer checking account?

  • Offer ATM card?

Marcus from Goldman Sachs High Yield Online Savings

Goldman Sachs Bank USA is a member of the FDIC.

  • Annual Percentage Return (APY)

  • minimum balance

    None to open; $1 to earn interest

  • monthly fee

  • Maximum Transactions

    Up to 6 free withdrawals or transfers per billing cycle *The 6/statement withdrawal limit is being waived during the Coronavirus outbreak under Regulation D

  • Excessive transaction fee

  • overdraft fees

  • Offer checking account?

  • Offer ATM card?

bottom line

As long as the vehicle market slowly recovers, prices will continue to be greatly inflated. As a result, Shefska says unless you absolutely have to buy a car now, it’s probably best to wait.

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

Editorial note: Any opinion, analysis, review, or recommendation expressed in this article is solely that of Select’s editors and has not been reviewed, approved, or otherwise endorsed by any third party.

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