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Autumn is traditionally the best time to buy a new car at a good price. But buyers face an incredibly difficult new car market and shouldn’t expect big deals this year.
The average transaction price for new car purchases hit a near all-time high in October, according to a Kelly Blue Book (KBB) report on Wednesday. The average price he rose $187 from September to October to $48,281. That’s just below the record of $48,301 set in August and puts him $1,775 higher than in October 2021.
Buyers can often buy a new car for hundreds or even thousands less than the suggested retail price (manufacturer’s suggested retail price, aka sticker price). However, the KBB reports that the average selling price of a new car has exceeded the suggested retail price for the 17th straight month.
In the coming months, some experts see the impact of the Federal Reserve rate hike, which has improved supply, raised interest rates on auto loans, and made financing new car purchases much more expensive. We believe that car prices will fall. Higher interest rates typically reduce buyer demand for purchases that require financing, which can lead to lower car prices.
The Fed probably hasn’t finished raising rates and inflation has not yet been contained. Car prices are still very high, and extra financing costs from high interest rates keep Americans from affording new cars. However, there are some strategies you can use to make buying a new car less painful.
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Tips for buying a new car now
Whether you’re looking for the best deal during this time of soaring prices, or you’re trying to make sure you find a model with the specs you’re looking for while stocks are tight, the experts have several strategies. says that there is can help.
Forget about year-end discounts on new cars
As new model year cars arrive in the fall and dealers try to clear excess inventory, they often offer the best discounts on the current model year at this time of year.
But due to supply chain and production issues, new car inventories are currently so tight that buyers are unable to find significant discounts, said Ivan Drury, senior manager of insights at Edmunds. increase.
“If you’re looking for really big discounts, don’t think about anything right away. Look at least a year out, maybe more, because car sales are in a state of nearly two years down. says Drury.
Exceptions could be cars that underwent major modifications in 2022-2023, said Aaron Bragman, Cars.com’s Detroit bureau chief. For example, the 2023 Honda Accord has been completely redesigned. So if his 2022 model is available at a dealer near you, you might be able to negotiate with the sales staff to get it for a lower price.
“Car manufacturers may have many older models in stock — no one has many models in stock, but they may still want to clear some models. Hm… one or two that can come off the dealer’s lot,” says Bragman.
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Your Trade-In Is “Worth More Than You Think”
Used-car prices have fallen in recent months, with government inflation data released on Thursday showing used-car prices fell another 2.4% from September to October.
However, recent declines have erased only a fraction of the used car price growth in 2020 and beyond.
For those who have a car to sell or trade in when buying a new car, the rising value of used cars is the best thing for them.
“It doesn’t matter how old it is or how many miles it’s on if you’re lucky enough to trade it in. It’s worth more than you think,” says Drury. We have seen some cooling of the values used, but it is far from normal and is not expected to be normal for many years to come. ”
Drury says dealers are “hungry” for used cars. It may also be worth exploring other options, such as selling the car yourself or finding out what you can get from a car-buying company.
get ready to raid
Currently, the automotive market is highly competitive and dealer lot turnover is blazingly fast. Therefore, if you find a car that you like at a dealership at a reasonable price, we recommend that you buy it immediately. If you wait just a few days, don’t assume it’s still there.
“The good news for buyers in the new car market is that inventory is starting to fill up somewhat, but it’s not really close to normal,” says Drury.
Low inventory means cars are expensive, and it also means buyers have a hard time if they have their hearts set on something specific. It’s important for these buyers to act quickly when they see something they like.
If you’re having trouble tracking down the vehicles and features you want, go online to see what’s available in a wider region, suggests Bragman. It also helps you compare prices and (hopefully) avoids a bigger markup than the MSRP.
“The days when you can actually go to a dealership, find a ton of cars, pick one and take it home that day, is really not happening today. A lot of that is behind us. in,” says Bragman.
Also, buyers are less stressed when it comes to finding a popular car if they are flexible with different trims and willing to travel.
If you can wait a few months, consider ordering exactly what you need. It has become common to order more affordable cars like
shop for the best interest rates
With the average new car loan interest rate rising to 5.7% in the third quarter of 2022, it’s important for buyers to ensure they get the lowest interest rate possible.
Experts encourage buyers to pre-arrange financing before they start negotiating with dealers. It gives buyers a benchmark and dealers make money when buyers raise money through partners, so they often try to offer something better.
0% loan promotions have become rarer, but Drury says there are still some of these opportunities if buyers can take advantage of shorter-term loans, such as 36 months, rather than the more common 72-month loans. says Mr.
Most buyers are looking at longer term financing plans to keep their monthly payments down as the price is so high. It may be necessary in this environment, but Bragman says it’s important not to let the loan term get too long. It is to pay for the car even if it is past time.
Details from money:
Best Auto Insurance Companies for November 2022
How to buy a car in 2022
Auto loan rates are rising, but there’s still good news for car shoppers
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