Car shopping? If you’re reading this article as the global chip shortage eases, we want to walk you through some steps you can take to find the vehicle of your dreams.
Simply put, there has never been a worse time to buy a new or used car. A perfect storm of factors pushed car prices to record highs, reducing the number of vehicles available for sale. You will find a slim selection of popular cars and the highest new and used prices.
The conditions that created this challenging market for buying a car may be with us through the first half of 2023.
That’s why you’ll need this advice to help you navigate the crisis.
Best Ways to Shop for a Car Right Now
Average prices may be high right now, but some buyers are still paying less. You want to be one of them.
How? We’ll tell you nearly a dozen ways to shop for a vehicle so you can score the best deal you can, even in a challenging market.
1. Wait, Even if it’s Painful
The first tip is the simplest – want to save money on a new car right now? Don’t buy one.
The market will normalize. Most experts thought the microchip shortage would ease in the second half of 2022, but it’s taken longer than that. Prices started to decline in February and then again in March, but they’re still 30% higher than a year ago.
So, fixing your old car should be your first option.
Conventional wisdom tells drivers that there comes a point when putting new parts into an aging car is counterproductive. Something more expensive is always about to break. But the economists at Kelley Blue Book parent company Cox Automotive say the average new car payment reached $791 at the end of December 2022. At that rate, stretching just a few more months out of your old car can save you thousands of dollars. It can also provide time for prices to calm down.
2. Know What to Expect as Shortages Ease
If you must buy, arm yourself with knowledge. Know that new car prices are about $10,000 higher than three years ago, just as the COVID-19 pandemic took hold, shutting down the nation. Meanwhile, incentives are at a historically low level.
In November 2020, the average buyer paid almost $3,000 below the sticker price. In March 2022, the average non-luxury car buyer paid $1,000 over sticker. Buyers paid $171 below sticker in March 2023. So things are improving.
3. Be Realistic About Your Needs
Americans consistently make a costly mistake when shopping – we buy impractical vehicles for everyday use. For example, a buyer might purchase 7-seaters thinking about how family comes to visit one to two weeks a year and then only use the three rows of seating to carry the whole family those days but not the rest of the year.
Or you might spend thousands of dollars extra on all-wheel drive (AWD) because it occasionally snows in your area.
Why not purchase with a purpose? So, buy a 2-row vehicle instead, and rent a car when the family visits. Why not work from home on snow days, if possible? Better yet, why not get cheap snow tires instead of AWD?
RELATED: Best Cars and SUVs for Snow: Features You Need
4. Shop Outside Your Usual Segment
Consider switching to a different vehicle category with more realistic needs in mind. Americans bought more SUVs than cars and trucks combined in 2022. Dealers sell more large cars today than any other vehicle type. Simple supply and demand make you more likely to negotiate a good deal on a sedan, not a Kia Telluride, which remains in short supply. A large sedan can carry nearly as much as an SUV and is often more fun to drive.
5. Consider a Different Brand
News stories have touted a thin supply of new cars, but the chip shortage did not affect every dealership or carmaker in the same fashion. As of March, fewer than half the brands face shortages of new vehicles to sell, like Toyota, Kia, Lexus, Honda, and Subaru. Others like Ram, Buick, Jeep, Chrysler, and Jaguar.
Our ideas about which brands build high-quality cars are often out of date. Quality and dependability studies tend to show that most new vehicles today are well-built, with only a slight difference between manufacturers.
6. Consider a Lease as a Temporary Solution
If higher interest rates are pushing up your loan on that new car, consider leasing a car. While leasing costs more than buying a car, it’s an easy solution for a tough problem when lenders tighten credit and charge higher interest rates.
If brand loyalty is essential to you, this year might be the right time to shift your allegiance temporarily. If you’re a lifelong BMW fan but can’t find the BMW you want amid the chip shortage, consider leasing another brand. You can always buy the Bimmer later when supplies return to normal.
Leases come with mileage restrictions. If you’re among those driving fewer miles, this could be a good choice. You might find it easy to keep to the terms of a lease.
RELATED:Average Miles Driven Per Year: Why It Is Important
7. Shop Outside Your Area
If we offered to pay you $2,000 to drive to a nearby town and back, you’d probably take it. So why not go to a nearby city and back to save $2,000?
Under normal circ*mstances, dealerships can trade with one another. That makes it relatively easy for your local dealer to sell you a car that’s sitting on another dealer’s lot and arrange for delivery. But, with every dealership low on vehicles to sell, those trades are rarer this year. So use the manufacturer’s website to locate a car you want, even if it’s not nearby, and travel to pick it up.
RELATED:How to Buy a Car Online
Note that shopping outside your state can make taxes and registration slightly more complicated, but most dealerships should be able to help you with an out-of-state purchase.
8. Boost Your Buying Power with Your Trade-in
When used cars are in good supply, any two dealerships will likely offer you a similar amount for your trade-in. In this market, that isn’t always true. Dealerships try to keep a good mix of used cars available for sale, and one might value your trade-in more than another. You can sell your vehicle to one dealership and use that money to buy from another.
So, call and shop your trade-in around so you can score the highest price. It can add steps, but the savings will be worth it.
TIP: Try our Instant Cash Offer tool and let the deal reach your email inbox. You fill in the details of your car and dealerships come to you with offers that you can take or leave as you wish.
9. Be Flexible on Color and Options During New Car Shortage
When new cars are in plentiful supply, being picky about the color and options you want is easy. With new vehicles in short supply, you might not find the exact model you want. Being flexible and accepting a different color or a few options you might not use makes all the difference in finding a vehicle.
You might even surprise yourself. One of our editors “settled” for an orange car once, only to discover a secret society of orange car owners who honk and wave at each other in traffic.
10. Can’t Negotiate on Price? Negotiate on Financing
When negotiating the price of a new car, you’re better off focusing on the out-the-door price than the monthly payment. But, in this climate, many dealers aren’t flexible with prices. They know that if you don’t buy the car, someone else will soon.
They can, however, negotiate the terms of financing. Savvy buyers qualify for outside funding before they go to the dealership. But you can always ask the dealer to try to beat your bank’s loan offer.
11. Consider Ordering – But Get it in Writing
Car-buying Americans like driving their new car off the lot the day they purchase it, not several months later. In Europe, car shopping rarely works that way. Most European car shoppers order the precise car they want first, and only then does the car’s production begin.
The American auto industry is steadily becoming more like the European industry, with buyers ordering the car they want and delivering later. If you can wait, it might make sense to custom order and put up with the wait for your new vehicle. Just be sure to get the deal in writing.
Watch for Markups
For any car buying deal you agree to, get the final and firm price in writing with the dealer’s signature on the contract. Chip shortages and inventory issues make markups more common.
A signed purchase agreement protects you from any last-minute price inflation. Question any and all fees on the bottom line and report issues directly to the manufacturers if you suspect price gouging.
Related Car Buying Articles
- How to Buy a New Car in 10 Steps
- When Will the Chip Shortage End?
- Chip Shortage Continues to Hurt Sales in Otherwise Hot Market
