Revving Up Your Car Buying Game:
How To Shop For Your Dream Ride
Is it possible to get a good deal on purchasing a car today? Unfortunately, if you want a new car, the answer is probably 'no.' According to J.D. Power, about 31% of new car sales in February sold above the manufacturer's suggested retail price (MSRP). Additionally, iSeeCars.com reported that the average cost of a new car last month was $45,296 compared to the MSRP of $41,637. While the car shortage that reached a pinnacle in 2022 has begun to ease, inventories have yet to return to their pre-pandemic levels. As a result, consumers may need to deviate from typical car-buying practices to secure their desired vehicle. To avoid being deceived, consider these tips for achieving a favorable car deal.
Know What You Want
Before heading out to a car lot, create a checklist of your desired car features which may include factors such as the car's age, appearance, style, performance, safety, reliability, size, comfort, fuel efficiency, cost, resale value, transmission type, engine size, miles per gallon, and color, particularly if purchasing a used car.
Sort the list by prioritizing the criteria that matter the most to you. Determine which features of your desired car you are willing to compromise on and which are non-negotiable. Often, individuals claim to prioritize safety, dependability, and fuel efficiency when searching for a vehicle, yet they actually prefer performance, luxury, and aesthetics. Being truthful with yourself can simplify the purchasing procedure.
New Or Used?
When considering whether to purchase a new or used car, weigh the pros and cons.
Price - Establish a budget of how much you want to spend, regardless of whether you are looking at a new or used vehicle. It will serve as a guide to prevent overspending and to remind you, when necessary, to walk away from an unfavorable sale. Dealers tend to mark up the prices of used cars significantly. Some offer warranties or level of inspection certification to reassure buyers of the vehicle's reliability. However, you will likely find a better deal through a private-party used car purchase. During the Pandemic, care prices soared as inventory dropped, but as automakers ramp up production in 2023, especially for lower-end vehicles, we should see some relief. According to J.P. Morgan Research and other analysts, prices of used cars will drop by 10% and for new vehicles by 2.5% to 5%.
But the sticker price is only one factor in the overall cost.
Financing - To get the best possible deal, knowing how you will pay for the vehicle before setting foot in the dealership is central. If you plan to pay with cash, wait to tell the salesman until you are ready to make the deal. Otherwise, they will be less likely to negotiate, knowing you have the money. If you plan on financing, know your credit score and shop around for a loan from a bank or credit agency. You may still get your loan directly from the dealership, but by securing a loan before arriving at the dealership, you can potentially get a better price, and if the dealership can't beat the rate, you'll have another financing option available. Keep in mind that new car financing rates are typically lower than for used cars.
Maintenance – Some car manufacturers will incentivize buyers with no-cost maintenance included for the first one to three years. Free maintenance programs vary by brand, but most include oil changes, tire rotations, and multi-point inspections. The upkeep and repair expenses on used cars are generally more costly due to wear and tear on the vehicle. If you're buying a used vehicle, be sure to check the Carfax report, which is the report card on the vehicle's mechanical and accident history, including its previous owners, service records, and accident reports.
Tax Incentive - If you purchase and put into use a new qualified fuel cell vehicle (FCV) or plug-in electric vehicle (EV) on or after January 1, 2023, and meet specific income requirements, you could qualify for a clean vehicle tax credit of up to $7,500 as per Section 30D of the Internal Revenue Code. Click here for more information on tax credits for new clean vehicles purchased this year.
Technology - One benefit of new cars is the tech standard features and upgrades available. Some of the most popular are:
- Advanced Driver Assistance System knows when a vehicle is in your blind spot, will keep you a safe distance from the car in front of you, and can prevent your vehicle from drifting into another lane.
- Automatic Emergency Braking (AEB) senses when a collision is imminent and activates your car's brakes, potentially avoiding or reducing the seriousness of an accident. AEB reacts quicker than humans and can initiate before the driver hits the brakes.
- Teen Driver Tech, for families with young drivers, these features can monitor speed, seatbelt use, sound system audio level, and hours during the day (or night) the car is driven.
Dream Car - If price is not an issue, the most significant benefit of buying a new car is customizing it to meet your specifications. But be prepared to wait. Depending on the type of vehicle, it may take a few weeks or months until it arrives a the dealership. However, if you're willing to wait and search outside of your immediate geographic region, your dream car might be a used vehicle someone is selling online.
Whether your next car is brand new or new to you, it is a significant financial commitment - and a major life event. It's not just a way to get from point A to point B - it's a decision that will have consequences for years to come. So don't rush. Take time to consider your options and ensure the vehicle is within your budget and meets your criteria of features and performance expectations.