Maybe you walked into a car dealership looking for a new car in the last year – and the dealership didn’t have one. Maybe you went online looking for a used truck and were shocked at the price.
You are not alone. Buying a vehicle in 2022 is more expensive and more difficult than most experts have ever seen.
“It won’t be like the last time you bought a car when you get a discount and all that stuff,” said Ronald Montoya, editor of automotive resource website Edmunds.com.
Due to the global shortage of microchips, automakers have been limited over the past year in the number of new cars they can produce. As it has been difficult for people to get their hands on new cars, the value of used cars has also increased.
According to Edmunds, the average monthly payment for new vehicles purchased in the first quarter of this year is expected to be more than 12% higher than the same period last year, and the average payment for used vehicles is expected to be more from 24% to one a year ago. Prices for new and used cars generally increase by around 2% per year.
Chuck Prescott wanted to save himself the headache of trying to find a vehicle for one of his daughters on his own. He hired Bob Dittel of Car Buyer’s Advocate in Apple Valley to help him with the research and purchase process.
“It’s awful right now – not that it’s fun to buy a used car,” Prescott said as he watched his daughter Talin examine a Honda Fit with Dittel at a used car park in Crystal.
Prescott ended up buying the vehicle.
Here are some tips for buyers to navigate a market that strongly favors sellers:
Mentally Prepare to Compromise
In the not-too-distant past, car buyers could haggle with dealers on price. Just be aware that buyers don’t have much bargaining power right now.
“Most people pay on the sticker [price] so you kind of have to have that mental readjustment of what’s considered good business,” Montoya said.
Paying the MSRP, or “Manufacturer’s Suggested Retail Price,” may even be a bargain for now. Some dealerships charge buyers for dealer-installed accessories, such as tinted windows. Additionally, more places are charging a “market adjustment” fee that can add $3,000 to $4,000 or more for high-demand vehicles, Montoya said.
Ask the dealer for an “upfront price” that factors in markups, fees, and taxes on top of the car’s price. If it’s more than you can afford, be prepared to walk.
But if you find something you like at a reasonable price, don’t wait.
“You have to be able to recognize a good deal and act quickly,” Montoya said. “It will be sold the next day if you don’t make a decision.”
Start shopping early
Normally, many serious car buyers would buy a car two to three weeks after they started their search, but now it can take at least two to three months or more to find what they’re looking for, said Steve Whitaker, owner of Whitaker Buick. GMC in Forest Lake and Past President of the Minnesota Automobile Dealers Association.
“I think the big message is that if you’re looking for a vehicle, whether it’s new or used, the important thing is to be patient and start early,” he said.
As far as financing goes, you can check with your own bank or credit union and see how that compares to what the dealership can get you. With interest rates rising, it’s best to lock in a fixed rate for the term that meets your monthly payment needs.
Be flexible and open-minded
People usually have a particular color or make and model in mind when looking for a car, but the more flexible they are, the easier it will be to find something, said Bob Dittel, owner of Car Buyer’s Advocate. Dittel charges a flat rate to find cars for customers and helps them review the car in person and negotiate the purchase with dealers. Often customers will name a brand they like and Dittel will research those makes and models and suggest other comparable brands with similar attributes.
If people are open to cars that lack certain features like heated seats, many of those bells and whistles can be added cheaply by auto shops, Dittel said.
Right now, SUVs are in high demand, so some customers might consider buying a sedan, Montoya said.
Exchanges are valuable
If you have a used car that you no longer want, now is a great time to sell or trade it in because your vehicle might be worth more than you thought. Inventory issues can work in favor of sellers and those who trade in vehicles, because used cars are worth more than they were worth just a few years ago and, if they are in good condition, they can reach prices similar to those of their initial purchase.
Like many dealerships, Whitaker Buick GMC is reaching out to customers to eventually sell their cars. There are not as many rental returns sold by car rental agencies. People who leased their cars ended up buying them. Even the auctions dealers rely on are experiencing tight supplies, Whitaker said.
“I’ve been in the business for 40 years and I’ve never seen it like this. … All of this activity has driven up used car prices to the point that even dealerships are struggling to source used cars. opportunity,” he said.
Shop and get trade-in offers from multiple places.
Go to car shows
If you’re like a lot of people and want to see a model up close, try going to mainstream shows so you can see the car you want in person. This year, the Twin Cities Auto Show returns to the Minnesota State Fairgrounds until May 22. Visitors will be able to compare hundreds of vehicles side by side and test drive them. This year will also be the biggest showcase of electric vehicles and electric technology in the show’s history.