Should I buy a car now or wait?

Buying a car continues to be a challenge amid record high inflation, a lack of support and rising interest rates. Since the start of the Covid-19 pandemic, new and used car prices have risen dramatically, leaving buyers with limited choices for finding affordable vehicles.

According to Kelley Blue Book, the average price of a new car hit an all-time high of $48,301 in August, up nearly 11% from last year. And with another interest rate hike from the Federal Reserve expected soon, the new car is quickly becoming a luxury that few Americans can afford.

However, there are still some signs of hope for those looking to buy an affordable car this year. Below, Select takes a closer look at how consumers can find the best deals without spending more than their budget allows.

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How to Strategically Buy a Car in 2022

Of course, the real question is: should you buy a car now or wait until 2023?

Zach Shefska, co-founder and CEO of YAA, a car buyer advocacy website, says you should wait to buy a car because prices will remain high due to low inventory.

According to a recent report from Cox Automotive, the number of available new and unsold vehicles remained steady at 1.09 million. While that was technically a slight improvement over last year’s 1.07 million available vehicles, the numbers are still nowhere near what they were before the pandemic, when there were easily 2.55 million available vehicles in July 2020, or 3.69 million available vehicles in July 2019.

Unfortunately, Shefska says it will be a long time before manufacturers can recover that number, but there are a few ways to give yourself a little head start when it’s time to buy your next vehicle if you just can’t wait any longer.

Track car prices aggressively before you buy

First, Shefska recommends doing some solid research on the car you like and looking for other similar vehicles that have recently sold in your area—the more research you do, the more confident you’ll feel when you walk into a dealership. You can find free tools for this on websites like YAA, CarGurus, and Cars.com.

If a dealership balks at your desired price point, mention the research you’ve done on other local and comparable offers. If they continue to pressure you and give you no leeway, consider taking the same research to another dealer and try again there.

Buyers have leverage for some used vehicles

Shefska also says that used car prices have been falling since the beginning of the summer and may continue to fall. This is because wholesale prices have come down, paving the way for dealerships to be able to lower their prices as well. However, there was a small spike in mid-summer that brought the average used car price to just over $28,000 in July 2022.

Kelley Blue Book says there are real savings to be had when it comes to buying larger vehicles like SUVs and pickup trucks as consumers have turned away from less efficient vehicles amid recent price spikes the gasoline. Meanwhile, savings on smaller compact cars can be harder to find.

According to Shefska, if you’re in the market for a used vehicle, consumers are in the driver’s seat. He strongly recommends that buyers track down vehicles that have been in the lot for more than 60 days — the longer the car sits there, the more incentivized the dealership becomes to sell it.

Come to the dealership with financing or cash

It is well known that car dealers make big profits by pairing their cars with loans on their premises. By walking into a dealership with financing from your local bank or credit union — or cash — you’ll have much more leverage to negotiate a lower car price.

To find a car loan in your area, you should first check to see if your own bank or credit union offers them. It’s also best to shop online so you can find a lender with the best available interest rate and repayment terms that work for you.

If you have good to excellent credit, consider working with one of the following lenders for your car loan, as they all offer a reasonable APR or annual percentage rate:

Select detailed the pros and cons of using a personal loan versus a car loan when buying a car. You can browse Select’s personal loan marketplace to compare loans and find the one that has the best rates and terms for you.

Before applying for a new car loan, check your credit score to see if you might qualify for a low-interest loan. You can also check and monitor your credit score with one of the following credit monitoring services:

Chase Credit Journey

  • price

  • Monitoring of credit bureaus

  • Credit scoring model used

  • Dark web scanning

  • Identity theft insurance

CreditWise® by Capital One

CreditWise information is independently compiled by Select and has not been reviewed or provided by Capital One prior to publication.

  • price

  • Monitoring of credit bureaus

  • Credit scoring model used

  • Dark web scanning

  • Identity insurance

American Express® MyCredit Guide

  • price

  • Monitoring of credit bureaus

  • Credit scoring model used

  • Dark web scanning

  • Identity theft insurance

Professionals

  • Score Goals lets you set a desired credit score and get personalized recommendations on the best ways to improve it
  • There is a credit score simulator

cons

  • Only one credit bureau report is tracked
  • No dark web scanning
  • Does not offer identity theft insurance

Finally, if you’re planning to buy a car with cash, it might be wise to stash your cash in a high-yield savings account that offers an above-average APY so you can grow your money a little faster. Choose ranked these accounts as some of the best:

LendingClub High Yield Savings

LendingClub Bank, NA, Member FDIC

  • Annual Percentage Rate of Return (APY)

  • Minimum balance

    There is no minimum balance requirement after $100.00 to open the account

  • Monthly fee

  • Maximum number of transactions

  • Excessive transaction fee

  • Overdraft fees

  • Offering a current account?

  • Suggest an ATM card?

Marcus Goldman Sachs High Yield Online Savings

Goldman Sachs Bank USA is a member of the FDIC.

  • Annual Percentage Rate of Return (APY)

  • Minimum balance

    None to open; $1 to earn interest

  • Monthly fee

  • Maximum number of transactions

    Up to 6 free withdrawals or transfers per statement cycle *Withdrawal limit of 6/statement cycle waived during the coronavirus outbreak under Regulation D

  • Excessive transaction fee

  • Overdraft fees

  • Offering a current account?

  • Suggest an ATM card?

Bottom row

As the car market continues its slow recovery, prices will still be highly inflated. As a result, Shefska says that unless you absolutely need to buy a car right now, it’s probably best to wait.

In the meantime, consider using more public transportation or carpooling if your budget allows. If you need to buy a vehicle this year, first check your credit score and bank account to see what you can afford without neglecting other financial responsibilities.

Editorial Note: The opinions, analysis, reviews, or recommendations expressed in this article are solely those of the editorial staff of Select and have not been reviewed, endorsed, or otherwise endorsed by any third party.

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