6 Tips to Buy a Car in Today’s Competitive Market

New and used cars are going for premium prices. If you plan to buy a vehicle soon, consider the changing market so you’re not taken for a ride.

A Classic Case of Supply and Demand

Why are prices still so high? At the start of the pandemic, automakers – anticipating a recession – slowed production and canceled orders for semiconductor chips needed to build their cars. This caused chip manufacturers to pivot, selling their supplies elsewhere and depleting their inventories. Automakers were surprised when consumer demand for cars didn’t slow after all, and were left without critical components they needed to ramp up production again.  It’s going to take a while for the market to normalize.

Sticker Shock

It’s a fact: The Manufacturer’s Suggested Retail Price is no longer a suggestion, it’s a reality. In most cases, you can expect to pay the full price or more. Some dealers are charging a markup of up to $5,000 over MSRP while popular or limited-production cars are commanding significantly more.

Here are six ways to buy a new or used car.

  1. Research Is Still Your Friend

Websites like TrueCar.comEdmunds.comCars.com and Kelley Blue Book1 offer up-to-date information so you can find and price your vehicle. Use our auto loan calculator to determine your monthly payments. Be sure to research dealerships as well.

  1. Order A Car  Then Get Financing

In times past, it was logical to get preapproved financing and then shop for the best deals. However, many franchised dealerships are changing their business models, compelling consumers to pre-order cars so they don’t have to keep large inventories on their lots. Depending on the dealer, vehicles may have set prices that include additional fees or markups.

If you know the car you want and have time on your side, then consider ordering your car to get the specific one you want. If you are used to setting up financing before shopping, you may want to wait until after your car comes in because you don’t want your preapproval to expire beforehand.

  1. Be Willing to Compromise

Sure, you may have a specific vehicle in mind, but if you need to buy now, reconsider your options. Holding out for a specific make, model, color and certain accessories can greatly reduce your ability to get a fair price.

  1. The Upside Of Leasing?

Another dealer strategy is pushing consumers into leasing cars rather than buying them. That’s because most consumers buy vehicles based on what their monthly auto loan payments are, and they’re much higher than normal right now. Leases typically are more affordable, because you’re not paying back any principle, and when the lease ends, the dealers have another car to add to their inventory.

  1. Get Help from Car-Buying Services

You may be a do-it-yourself kind of shopper, but if you need help right now, you can count on SchoolsFirst FCU’s car-buying services to help you find a quality new or used car.

  • Autoland: A consultant help you find and finance your car and even delivers it to your closest branch.
  • Car Buying Service, powered by True Car: Shop online, see what others have paid for the car you’re shopping for. Offers are available exclusively for Members not available through TrueCar’s website.
  • Enterprise Car Sales: Get a no-haggle price on used cars. An ASE-Certified Technician rigorously inspects each car.
  • FastTrack Auto Dealers: Choose your car from a network of more than 500 CUDL-affiliated dealerships where you can apply for SchoolsFirst FCU immediate financing onsite.

 

  1. Play the Waiting Game

Patience can be your friend during times like these. Unless you absolutely must get a car now, experts agree that waiting to buy may be the answer, although prices aren’t expected to normalize until 2023. If you can wait, wait.

Have Questions? We Can Help

Sometimes it’s helpful to get a reality check on your current situation. Together, we can look at your budget and offer advice to help you make the most of your money. We’re here for you. Get in touch with us today.

 

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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or GreenPath Financial Wellness counselor who can help tailor a solution for you.

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