2022 has been tough for car buying, both in the new and used markets. Pent up demand from pandemic lockdowns clashed head-on with a shortage in new vehicles being built. Car lots emptied out to the point where dealerships were arranging the few cars they had creatively to not look out of business. Used cars became scarce as people held onto their old cars for longer periods. If you find that you must buy a car right now here’s a few tips on car buying in a tough market.
Wait To Buy If You Can
Let’s just get this out of the way. Right now in 2022 it is a terrible time to buy a car. Used car prices are still high and new car inventory is still short. This situation may last well into 2023 unfortunately. If at all possible, wait for things to calm down and keep your old car going as long as possible with regular maintenance and maybe a good detailing. Nevertheless there are times when choosing your car buying window is not a luxury. Having to replace a totaled car or buying a first car means wading into the fray, but you will be prepared now.
This one goes for both new and used car buyers. Head straight to your local bank (or even better a credit union) and get your loan paperwork out of the way. Doing so gives you a set budget for shopping and keeps you from dealing with dealership finance office shenanigans. Having the loan paperwork done lets you focus on the vehicle itself and not what kind of rate you will get. Once you have negotiated a final price for the vehicle, then you can tell the dealership you have arranged your own financing.
Walking through the door of a dealership and announcing you want to buy a car with cash doesn’t make the statement you think it does. Dealerships deal in large sums of money all day long, so even wagging a $40k check in the air won’t make salespeople jump to their feet. The profit is much higher when a vehicle is financed through the dealership. Dealerships get bonuses based on making loans using their own in-house financing (of financing from the automobile manufacturer). Here’s where things get tricky. If you paid attention earlier you are already pre-approved from your credit union for a car loan, so technically you don’t need dealership financing. But if you are savvy, there are times when you can negotiate a better price for the vehicle by going with the dealership financing.
The key is to make sure there are no prepayment penalties on the dealership’s loan. Here’s the idea: you finance through the dealership in exchange for a grand or two off the vehicle price. Once the paperwork is signed and you have the vehicle, you turn around and use your loan from the credit union to pay off the dealership’s loan. You may have to wait 30/60/90 days to dodge any prepayment penalties, but the short term accrued interest should be far outweighed by the overall savings. If the dealership financing offer is lousy, you already have your pre-approved loan from your bank in place anyway.
Don’t Fall In Love
While the supply of vehicles is tight, do not get attached to a specific one on the car lot. Yes you should like the car you are buying, but remember that they are mass produced which means there are many, many exact copies of that same vehicle in the world. Unless you are looking for a special edition vehicle, that new sedan likely has a twin at the lot across town. Used cars can be a bit more tricky as they can live very different lives before being put up for sale. The main takeaway is to not get emotional during the car buying process. It is okay to be excited, but don’t let that excitement overrule common sense buying practices.
You will probably need to expand your vehicle search far beyond your own city. Driving to the next state to buy a car may seem strange, but it happens more often than you think. Some dealerships will even move a vehicle for you (typically for a fee). If possible make a trip to inspect the vehicle yourself before signing any paperwork. If you find a vehicle in another state make sure to research how your own home state handles out of state vehicle purchases so you can take care of any taxes, registration fees or other documents properly.
Expand Your Vehicle Horizons
Automotive industry expert and co-creator of the Long-Term Quality Index Steven Lang suggests being flexible about what kind of vehicle you are looking to buy. “If you are willing to buy a sedan versus a SUV or crossover you can save nearly 30% right now” says Steven. Be honest with yourself about what you really need in a vehicle and if more than one vehicle type can fit the job. Having multiple acceptable vehicle options on the board greatly expands your chances of finding a good deal.
Inspection Is Not Optional
Never skip getting a used car inspected, ever. A vehicle may look shiny and new while hiding any number of issues under a layer of fresh wax. Before you start used car shopping, find a shop you trust to perform vehicle inspections on your behalf. Your local NAPA AutoCare will be happy to help you as well. Ask the used car seller if you can take the vehicle to your preferred shop for a pre-purchase inspection. If the seller declines your request, walk away. Never use a shop the seller recommends. Yes a pre-purchase inspection will cost you money up front, but it could save you thousands down the road by avoiding a lemon.
Buying a car when things are rough isn’t impossible, it just means you have to get creative. Just follow our tips and you will be happily motoring in no time.
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With an automotive writing career spanning over two decades, Brian has a passion for sharing the automotive lifestyle. An avid DIYer he can usually be found working on one of his many project cars. His current collection includes a 1969 Olds Delta 88 convertible and a slant-6 powered 1975 Plymouth Duster.