Not so long ago, buying a car meant choosing between shiny new and used cars lined up as far as the eye can see, with hefty incentives like cash discounts and discount financing on new cars. Thanks to pandemic production stagnates and ensuing supply chain problemsthat has all changed.
With people buying cars again, inventories have fallen, prices have risen and you have to act quickly to close a deal. We spoke to the experts to find out what you need to know about buying a car in 2022.
Expect to act quickly when you buy new
A number of factors have made it difficult for new car dealers to move products. Shortages of computer chips for new cars and other auto parts, COVID-19 lockdowns in China and the war in Ukraine, where some auto parts are sourced for European automakers, are all factors reducing the supply of new cars in the US market. , according to Michelle Krebs, executive analyst at Cox Automotive† “There’s all these forces, and we just haven’t caught up.”
So if you get to the lot and see something you like, act fast – the model you’re eyeing today may not be there tomorrow. “You have to be very decisive in this market,” says Ivan Drury, senior manager Insights at Edmunds†
So go to the car dealership to make a deal. Know how much car you can afford to buy, how much you have for a down payment, and how much you can borrow. Have your financing pre-approved by your bank, credit union, or an online lender. That way, you can come to the dealer with the best loan terms you’ve found, and the dealer will have to offer you a lower percentage or down payment if they want your car loan company.
Be prepared to spend more than you expect
Due to low inventory and high demand, you can expect higher prices. “Prices for both new and used cars set records in December,” Krebs said. “Today they are one of those records, but still high and are expected to remain high, especially for new vehicles, due to strong demand and low supply.”
So if you are mainly going to buy a new car, you should brace yourself. In the past, only popular models were sold at sticker price or even higher, but now it’s happening all over the new car market. “Stickershock is not a joke,” Drury says. “It’s happening out there.”
How much can you expect to pay for a new car? “The average transaction price is $45,000,” Drury says.
Look for new car incentives, but don’t be surprised if you can’t find many
Do you think getting an incentive for a new car, such as a cash discount, will help lower the prices of new cars? It could – if you can find one. “Incentives are historically low,” Krebs says. “There just isn’t much available.”
But if you’re a college student or in the military, you may want to ask for $500 cash rebates on new cars. For more information on cash discounts, visit the manufacturer’s website and you can also ask the dealer. Repeat customers can earn a loyalty discount of $1,250 to $1,500, according to Drury. And with the prices so high, every little bit helps.
If you are not in a rush to buy a car, you can get an incentive by having the dealer order a new car from the manufacturer. “Consider putting a deposit on a copy that a dealer knows is coming in,” Krebs says. “Some automakers offer an incentive to order and wait.”
Expect to pay more for used cars too
Prices for used cars are also rising, but buying second-hand is of course still a more affordable choice than buying new. The average used car price peaked at $28,205 in December 2021, according to Kelley Blue Book† “The values are 25% to 30% higher for used cars,” Drury says.
That means, as soon as you see a listing that intrigues you, you’ll get an online rating from Blue Book of Edmunds before you even contact the seller. If the listed starting price is much higher than what those expert sources suggest, you may want to keep looking — or at the very least consider how much that vehicle is worth to you.
Get more money for your trade-in
Here’s some good news. Because there is a lot of demand for cars for sale, this includes your trade-in. So take a good look at the car you have been driving for years. “Your trade-in is [likely] worth a lot more than you think’, says Drury.
Do you have a second, third or fourth car that you may no longer need? Now is a good time to consider selling it. With the rising prices of used cars and the high demand for cars, you are probably getting a pretty penny. Check Kelley and Edmunds online to see if you’re sitting on a cash cow you weren’t expecting.
Broaden your car search beyond your region
To get a deal on a car in 2022, you have to take some extra steps. That includes hunting outside your own backyard. “People are looking across city limits, county lines, state lines,” Drury says. “The competition is fierce.”
Broaden your geographic search for a car and be open to different makes and types of vehicles. You may also want to lower your hopes of finding a bargain. “Understand that there are no killer deals,” Krebs says.
Be especially open-minded when buying cars, including colors and options. “Be flexible when it comes to the vehicle you want,” says Drury.
Hold off on buying for now
If you’re put off by the high prices on the new and used car market, and your car still drives fine, it may be worth waiting. Keep your current wheels running smoothly by following all recommended maintenance, such as changing tires and changing the oil. You want the car to last a long time. When you’re ready (or it finally stops), hopefully the market has calmed down and you can find what you’re looking for at a more reasonable price.
Prices were correct at the time this article was published, but may change over time.