(iSeeCars) – Used car prices are at record highs as demand continues to outstrip supply amid the current microchip shortage. Used car prices are up 30.4% over last year, representing more than $8,000 average increase in the price of a used vehicle over last year . New car prices also rose, with the average new car selling above list price. Automakers also cut incentives due to the shortage of new cars, which increased the average price paid for new cars and pushed buyers to pay more than the MSRP.
Today’s auto market has many consumers wondering if they should buy a car now or wait for prices to drop. Here are some important car buying tips to help buyers navigate the tough new and used car market.
- wait if you can
The best financial decision is to wait to buy a new or used car and to keep your current car as long as possible. New car inventory is expected to improve from the second half of 2022, which will also create more used car inventory as buyers trade in their old cars. However, the longer you can wait, the better, as there is a lot of pent-up demand in the new and used car market. Higher prices and reduced inventory on dealer lots are expected to persist into next year. Additionally, used car prices have fallen since January, but will likely rise in the coming months as consumers receive their tax returns.
- Be flexible
If you need to buy a vehicle, it’s important to be flexible whether you’re buying a new car or a used car. This means that if you want the best possible deal, you’ll probably need to be flexible about the make, model, finish, and color of the vehicle. For new cars, many of the most in-demand cars sell for above MSRP. To avoid these price increases, you can consider a less popular model that may not have the same price increases. Or, you may have to settle for a different trim level or vehicle color. The same goes for used cars, as less popular models are unlikely to command the used car price increases as the most in-demand vehicles. Being flexible also applies to where you are looking for the car. If you’re willing to expand your network to neighboring states, you’ll increase your chances of finding the vehicle you’re looking for, and the time/energy spent picking up the car could still save you money down the road. whole.
- Trade while the market is hot
If you have a vehicle that you can trade in, you should take advantage of the current high trade-in values. Maybe you have an extra vehicle that you don’t drive often, or maybe you’re a city dweller who can manage without a car. You might even consider trading in a more gas-guzzling vehicle, like a pickup truck, for something more fuel-efficient, like a sedan or electric vehicle (EV). Even though small vehicles, hybrid cars and electric cars are in high demand right now, you could end up saving money in the short and long term by buying a more efficient vehicle.
- Consider buying out your lease
Just like new and used car prices, rental rates are also high right now. If your lease is ending, your best financial decision is probably to take advantage of your vehicle’s high residual value and buy your car at the end of your lease instead of leasing another vehicle. When you signed your lease, you were offered a purchase price. And since the start of your lease was before the pandemic, supply chain issues, and chip shortages, that buyout price is likely much lower than current market value. This means you can buy your car and resell it for a profit or keep it as a means of transportation until the market stabilizes.
- Compare new and used prices
Buying a used car used to be a guaranteed way to save on buying a vehicle. However, many used cars sell for more than their new versions. Buyers looking for lightly used cars should always shop around against new cars, and buyers who can’t find the new vehicle they’re looking for should avoid the models with the highest price increases if they decide to buy. buy a used car instead. It should be noted that interest rates are generally lower on car loans for new cars, which should also factor into your decision.
- Always do your due diligence
Even though the used car market is very competitive, you should always make sure to test drive the vehicle and get a vehicle history report. Going through a car dealership isn’t the only way to get a vehicle history report. Online lookup tools like iSeeCars Free VIN Checker can provide a free CARFAX or Autocheck report as part of its comprehensive VIN checker tool, which will also help answer any important questions car buyers should ask. before making their purchase. Be sure to check out our How to Buy a Used Car guide for more tips on buying a used car.
- Know the best times to buy
If you can wait, know that certain times of the year are more likely to save you money on a used car. The best time to buy a car is at the end of the year in November and December due to high trading volume as buyers take advantage of year-end sales and incentives. This is also after the release of new model year vehicles, so dealers want to move their old inventory to make room on dealer lots. Holiday weekends like Thanksgiving and Veterans Day offer plenty of savings opportunities. Although holiday savings are not common in today’s market, we can expect them to return when the market stabilizes.
With record high prices for new and used cars, it’s a tough time for a car buyer.
Automakers are still struggling to keep up with demand due to continued supply chain disruptions from semiconductor shortages, but inventory is improving on car dealer lots. If you’re buying a car in the near future, you probably won’t be able to escape the high prices, but if you’re smart, you can find the best possible price.
iSeeCars.com is a car search engine that helps shoppers find the best car deals by providing key information and valuable resources, like iSeeCars’ free VIN check reports and Best Cars rankings. iSeeCars.com has saved users over $332 million so far by applying big data analytics powered by over 25 billion data points (and growing) and using proprietary algorithms to analyze , rate and objectively classify millions of new and used cars.
This article originally appeared on iSeeCars.com.