Lifestyle

Why It’s a Terrible Time to Buy a Car, and How Long You Should Wait

Illustration for article titled Why It's a Terrible Time to Buy a Car, and How Long You Should Wait

Photo: Simone Hogan (Shutterstock)

With new and used car prices soaring due to shortages, you might want to reconsider your plans to buy a car and try again later—at least until the end of summer, or whenever supply picks up again. Otherwise, you’ll really have to do your research to get a good deal, as you’ll be facing higher prices and fewer choices.

Car shortages have jacked up prices

Factory shutdowns early in the pandemic have resulted in a microchip shortage that’s slowed down production on new cars, resulting in lowered inventory by 64% at dealerships nationwide, compared to a year ago. You may have noticed fewer cars on dealers’ lots, too—the average number of new cars on lots is trending towards the low-30s, well below historical norms of at least 60, according to Cox Automotive. According to Kelley Blue Book, the average vehicle listing price was $39,833 in April, a 7.9% jump above comparable 2019 numbers.

The shortages, coupled with increased demand, have affected the used car market, too: The average price is now nearly $24,000, according to the CarGurus’ price index, which is up 27% compared to last May (pickups are most in demand, with prices jumping up by 40.6%).

Hold off on buying a vehicle right now, unless you really need one

As Matt DeLorenzo, senior managing editor for Kelley Blue Book, explains:

Simply put, you can’t buy what’s not there. At this point, shoppers who can wait to buy a car probably should, but for those who can’t afford to wait, it’s more important than ever to shop smart.

But how long will these prices last? No one knows for sure—auto companies expect the shortage to worsen throughout the summer, after which supply is expected to pick up again. That said, some manufacturers are suggesting a longer timeline, perhaps by early 2023. Of course, it’s not easy to predict future pricing, either—but it’s reasonable to assume that a shortage is driving up prices and that a shortage won’t last forever.

Either way, you should make a deal when the time is right for you, based on your circumstances (some people don’t mind overspending, and that’s fine, too). Just make sure you consider your options: For example, if you already lease a car, consider extending the lease if you’re already happy with the car, as you’ll be able to lock in your current monthly rate while buying more time to assess the market. And a trade-in of your current car is another possibility, too, as cashing in on inflated used car prices might make the price of a new car worthwhile.

If you’re buying, do your research

Before you buy, research prices using sites such as Autotrader, KBB, Cars.com, CarGurus.com, and TrueCar, as they will give you a strong idea of where the market is. Per Kiplinger, these sites will offer algorithmically derived grades or labels like “Great Deal” or “Overpriced.” Additionally, most sites have nationwide listings, so consider expanding your search to other states, too—if you find a deal on a vehicle that’s hundreds of miles away, it still might actually save you money to spend a few hundred extra bucks to fly to a dealer and drive it home (as some people are doing).

For more advice, read this Jalopnik post. Additionally, Clark.com has some good tips on the best times of day, week, and month to purchase a car, which is worth checking out.

 


Source link