Valerii Apetroaiei / Getty Images/iStockphoto
While it’s been nearly two years since a microchip shortage turned the auto industry into a market characterized by scarce choices, high prices and long wait times, not much has changed despite the rest of the economy largely moving forward. .
Many drivers simply can’t put off buying a new car any longer, but it’s still a jungle.
See: Stimulus Updates to Know for Spring 2022
Cash App Borrow: How to Borrow Money on Cash App
“Today’s car buyers face a number of challenges, including high inflation, rising interest rates, low dealer inventory and low incentives,” said Ian Lang, senior auto advisory editor at bumper.com†
With high prices, little choice and money getting more expensive to borrow, what should buyers know before going to the dealer? GOBankingRates asked the experts.
You can save time and money by pre-ordering
Lang recommends purchasing your vehicle from the manufacturer to avoid dealer markings and add-ons.
“You’ll get exactly the color and options you want, provided you’re willing to wait about six to eight weeks,” he said. “By ordering a vehicle, the dealership can save on lot costs and insurance for vehicles parked on or off site, which it can then pass on to the consumer. The easiest way to order a vehicle is to go to a car manufacturer’s website and build the desired vehicle configuration, then send this information to your preferred dealer.”
According to Lang, it’s common for dealers to feel extra pressure to sell cars at the end of the month or year — which is exactly when to strike.
“The dealer may have a sales target by the end of the month, in which case it could lower its price,” Lang said. “Dealers can also set annual quotas that lead to lower prices at the end of the year.”
Lang also advised waiting until just after the new model is released to look for deals for the previous model year.
Take our poll: Do you think the Fed’s rate hike will help or hurt the economy?
Put power in your hands by securing external financing
It’s more important than ever not to paint yourself in a corner where dealer financing is your only option. Instead, give yourself the leverage of a cash buyer by getting pre-approved.
“If the dealer can beat your lender’s pre-approved interest rate, having the loan puts you in a great bargaining position,” Lang said. “Financing is a big part of how dealers make money, so they’re incentivized to do whatever it takes to finance with them — including lowering the price of the car in some cases.”
Your trade-in is a gold mine
The reason prices are so high and inventory so low in both the new and used markets is simple: too much demand for insufficient supply, leaving you in the driver’s seat when it comes time to trade-in.
“Your existing vehicle is as valuable as it has been since you bought it,” Lang said. “While it’s true that you can usually get more money selling a car privately, low inventory and high demand means dealers are willing to pay a premium for your trade-in. That can significantly reduce the cost of a new car.”
Buy used? Go for luxury (sort of)
Robert Walden, founder of VehicleFreakrecently bought a 2011 Yaris with 12,000 miles from a Porsche dealer for $7,500 – it’s a trick he recommends to everyone.
“They just wanted to take it off the lot because they have Porsches for sale,” Walden said. “If you’re looking for a good car dealership, call every luxury dealer in your area and ask them, ‘What’s the cheapest car you have in your inventory?’ They usually want to move these cars as quickly as possible, so you get a much better deal than buying the same car from a non-luxury dealer.”
Treat your mechanic as a purchasing partner
Having a trusted mechanic is an opinion worth paying for when buying used.
“Bringing the car to a mechanic who is not involved with the dealer will give you a fresh look at the vehicle to see if there are any issues you should be aware of that could give you more leverage in negotiations” , says Nicole Miskelley, manager of PMR, an auto repair and tow company in Marion, Illinois. “Not only that, these mechanics can also tell you other things about the possible future of the vehicle. Mechanics see many different cars in and out and can tell you what common problems they see with different makes and models that you should be aware of.’
According to Jonathan Ganther, co-founder and COO of Brakes to go, getting a good price is only half the battle. The other half will ensure you get the car that fits your wants and needs — not the dealer’s — by doing thorough research on a site like Autotrader or Cars.com before talking to a seller.
“These sites allow you to do a detailed search of the vehicles in your area and measure their market value,” Ganther says. “To find the best match, start with a general search to get an idea of what’s available, and gradually narrow it down. Important filters to use on these sites include year, price, safety rating, body style, etc. By understanding what is on the market, you can negotiate price more effectively with the dealer.”
When you’re sifting through the numbers to determine if you can afford the car you want, consider the cost of your premiums.
“If you don’t know the impact of insurance on your monthly payment, you could regret your purchase,” said Arnold Chapman, founder and CEO of the online auto industry magazine. ELDFocus.com† “Take the time to review the different insurance rates associated with the car you want to buy.”
More from GOBankingRates