Buy Now or Wait? by Dorethia Kelly

Buying a car used to be a no-brainer. You’d buy in the winter or near the end of the year when dealerships were clearing out old inventory and discounting them heavily to make room for new cars.

Today that’s not the case. Inventories are low, prices are high, and the market just isn’t favorable for car buyers.

According to the Consumer Price Index, used car prices have increased 40.5% since last year and cost $28,000 on average while new cars cost an average of $47,000. With the smaller inventories and lack of parts, decreasing prices don’t seem to be on the horizon. Here’s what you should know.

What's All This About CHIPS???

Nope, we're not talking about snacks! The car shortage comes down to a shortage of microchips. With microchips being used for many other technologies that were much needed during the pandemic, car manufacturers had to sacrifice.

To make up for the issue, they focused on making only higher-end vehicles that earned them a larger profit versus the more affordable cars. This led to a major shortage of affordable cars, shooting their prices up too.

So for a new car, many have had to order it and then wait months. For used cars, they've had to hunt until they found one and possibly drive to nearby car lots to buy it.

No Negotiations

What has blown me away is that there is literally no negotiating going on. Dealerships are holding fast to the sticker price because they know they can get it. One saleswoman told us straight up (nicely) not to even try because there is no one to ask if they can cut a deal because they can't lol.

Will Car Prices go Down Soon? What about Interest Rates?

The question everyone wants an answer to is ‘will car prices go down soon?’ Unfortunately, the answer is probably not.

Inventory levels still aren’t where they were pre-pandemic and many don’t even know if they’ll ever get that high again. With lower inventories comes more demand for a limited supply product which causes prices to remain high.

With higher car prices, interest rates can be a grave concern too. If they are too high, it could make buying a car impossible for many. Fortunately, even with the rising rates predicted by the Fed, auto loan rates are predicted to increase as little as 1/3 to 3/4 of a point which makes little difference in your payment. In fact, rates are super low ... like never... ever seen before. So, much like homes, if you pay a little more... your interest is low so it offsets it some.

The Smart Way to Choose a Car if you Must Buy Now

What if you must buy a car now? Here are some quick tips to make it a smart purchase.

Still shop around for a car loan Get pre-approved by lenders and compare your options. Look for the loan with the best terms, which means the lowest total cost including interest and fees. Look at the

bottom line and not just at the interest rate. Definitely TRY to negotiate with your Kelly Blue Book (KBB) Report in hand... let them tell you no.

Know what you need and don’t overspend for what you want Did you catch that? Find a car that suits your needs (size, capability, etc.), but don’t get caught up in the new-fangled features you want but can live without. You’ll keep the price down by buying a car with fewer features.

Look for dealership deals The kickback deals aren’t as forthcoming as before, but they’re still out there. Shop around and don’t be afraid to even go outside of your area or even state to find the best deal.

Also, don't forget about services like Carvana and Car Gurus - they do all the maintenance checks and deliver your vehicle to you. Buying a car whether new or used will cost you more right now, but remember the lowinterest rate is going to help. If you want something new or new to you now just do your homework. Get the most attractive financing and shop around for the best deal. You might have to do a lil' driving to get the car you want at the best price, but if it saves you thousands of dollars, it will likely be worth it.

©2022 Dorethia Kelly – All Rights Reserved.