This has been a tough year to buy a used car. My daughter needed new wheels this spring and when I went car shopping, I found out that things have really changed. The last time I bought a car was during COVID. You remember, when you were the only person on the dealer’s lot and the salesman seemed like he had not talked to anybody all day. Well, things are different now.
Prices are higher and inventories are lower
While the chip shortage is mostly over, it has left a lasting impact on the used car market. During COVID, car makers simply made fewer cars. As those cars are now coming off their typical three year leases, there are fewer of them for the used car market. That has made it harder to find the car you want and especially one worth buying.
The good news is that we are starting to see the prices of used cars come down this year. Of course, it depends on the model—high demand cars may not be experiencing any price softening. As such, you’ll need a new approach to car shopping.
Consider a new car
One of my relatives told me a story this year of trying to buy a used Toyota Prius that was just two or three years old. As they were starting the paperwork in the showroom, they happened to be looking out at a brand new Prius. So, he asked how much and was told that the new car was about $1,000 more than the used Prius that had thousands of miles on it. The result: they bought the new car. These stories are being repeated all across the US as the price difference between new and used vehicles remains closer than it has been in many years. While a new car will likely cost more, the marginal additional cost may be well worth it.
Another reason to buy new or newer is all of the new safety systems such as automatic braking, stability control and accident-avoidance systems that are built into newer cars. These systems can make us safer drivers. If you have a teen driver, this can be especially worthwhile since they are responsible for causing the vast majority of accidents (even though it may seem that an 85-year old is driving through the side of a house or the front door of a 7/11 store every day).
If your car is reaching the end of its useful life, a new car may be the best option especially if multiple, expensive repairs will be required.
Consider buying a car “for now”
With prices still high for new and used cars, consider buying a different car for now with the expectation that you’ll trade it in for your favorite vehicle in a year or two. Moderate or low
demand cars may not be on your list but they are worth considering. You’ll likely pay less and, in a few years, supplies may improve so that you don’t have pay over asking price to get the vehicle you want. If you are interested in an electric vehicle, waiting a bit may expand your choices as most automakers are introducing many new electric vehicles in the next few years. If you wait a year or two, you may be able to choose from a much wider range of models.
Fix up your car
Already Americans are holding on to their cars longer than ever before. With the cost of used and new cars so much higher, it may make sense to perform that major maintenance that you were hoping to put off.
It may take longer
As if car buying did not take a long time to begin with! Unfortunately, with used cars in short supply, there are a lot more cars with problems out there. Take your time and always have your used car checked out by an independent mechanic. This spring I shopped dozens of dealers but did not go to any that refused to let me take the vehicle to my mechanic for an inspection. One dealer on the AutoMile here in the Boston area insisted that there was no reason to bring the vehicle anywhere because of their 200-point inspection. It may sound impressive, but it is always better to make the effort to have your vehicle inspected by an impartial third-party first. If you do it after the purchase and something is wrong, the dealer has little incentive to make things right. It can turn into a nightmare.
It takes some time but over the years my mechanic has helped me avoid some vehicles with serious engine, steering and accident damage that I could not see when test driving the cars that seemed like the perfect ride.
My first car, a 1970 Chevy Malibu
In 1983 I needed a car to get me to jobs and job interviews. Sadly, I had to sell my motorcycle but that’s another story. It was yellow with a 350-horsepower engine under the hood that purred like a kitty at 65 miles per hour. In those days I took pleasure at driving next to little Toyota Corollas on the Interstate and then just hitting the gas and seeing them disappear in my rear view mirror. It had a bench front seat and air conditioning. It was special, too, as our family drove it to Florida and back in 1970 for our big summer vacation. That trip was a blast except sitting between my two brothers in the back seat—that did not last long. I held on to it until I could save up enough money to buy a more reliable car that got better than 10-12 miles per gallon. I’ll always remember that car because it was my first.
If you have your own tips about for buying a new or used car, let me know and I’ll consider sharing them in an upcoming blog. (If you have any good tips on buying a boat, I’d really like to hear about those experiences, too.)
If you have other questions, give me a call. I’m here to help. You can schedule a quick call with me by clicking HERE.
Lyman H. Jackson
· On becoming an empty nester https://planwithfps.com/blog/on-becoming-an-empty-nester
· 4 must-do’s before you retire https://planwithfps.com/blog/4-must-dos-before-you-retire
· High expectations for retirement https://planwithfps.com/blog/high-expectations-for-retirement
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