New car prices are insane. Used car prices are even more insane. This chip shortage is rocking the boat customers and major manufacturers, like Ford, Toyota, and Chevy. While the chip shortage doesn’t seem to be easing up any time soon, there may be some relief. Consumer Reports has a few tips for navigating insanely high new car prices and limited inventory.
Why are new car prices so high?
Our old friend, chip shortage, seems to be here with us for the foreseeable future. This – along with other production delays – has created a massive log jamb in the automotive industry. The result of these delays is fewer cars in the lots, and a premium on the more abundant used models. As Consumer Reports notes, this is a classic example of a seller’s market. The people with the cars have the power to set wild prices because there is so little supply to meet the demand.
How to get a deal on a new car?
One of the best weapons in a car buyer’s arsenal right now is their used car. Historically, trading in a used car to a dealership rarely helped the individual. With the demand for used cars, dealerships are tripping over themselves and paying historically high prices to get their hands on good used cars. Hell, reports are showing that used cars with over 100,000 miles are more valuable than ever before.
The first step is to be wise with the assets you have. This means maintaining your existing car to keep it as valuable as possible. Pairing that mindset with lower expectations and widening your scope of what types of cars you are willing to get will make snagging a good deal on a new car much easier.
“The demand for SUVs and pickups continues to be high,” says Jake Fisher, senior director of Consumer Reports’ Auto Test Center. “But a midsized sedan might suit your needs just as well, and with greater availability, you are much more likely to find a good deal on one.”
Don’t be afraid to widen your search
Consumer Reports suggests that because the demand for SUVs and trucks is through the roof, you’d do much better by considering something else like a sedan or wagon. People often have color and trim preferences when buying a new car. These limiting factors will make it harder to get a deal (or a new car at all) because supply is so low. So, get flexible. Let go of having to have the exact model and trim you had in your head and find other options that excite you and meet your needs.
Getting pre-qualified will help in buying a new car
It’s a bit of a boring piece of advice, but that is often the best kind. Jon Salzberg, director of Credit Karma, says that getting prequalified in normal times is a good idea, but it is a solid play in these wild times. Since the market is heavily in favor of the seller, getting prequalified for a loan will give a buyer the most negotiating power since financing is where the best deals are found.
Don’t get impatient
One of the best things to do when buying any big purchase is to take your time and to understand what the market looks like. This may not be fun advice either, but it’s solid. While you wait to find the right situation, get your current ride up to date on its maintenance and fix any issues, it might have. This will allow you more time to find the ride vehicle while also raising the vehicle you will use as a trade toward the next one.
Buying a new car can be difficult and overwhelming, but it doesn’t have to be painful. Remember to take your time, utilize the assets you have, and remain as open as possible. These three tips will help no matter what you buy. Good luck, and Godspeed.