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4 minutes read Read Published March 03, 2023.
Authored by Rebecca Betterton Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase a car.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain the confidence to take control of their finances by providing concise, well-studied and well-researched content that reduces complex topics into manageable bites.
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Buying a brand comes with the benefits of personalization, the latest technology and the sought-after new car smell. However, over the last few months, purchasing new cars has also come with record-breaking costs. In fact, up 11.9 percent from around this time last year, the average purchase price (ATP) hit $48,000, as reported by . If you are planning to buy a brand new car likely to be in the near in the near future, it’s best to consider best practices before making the trip to the dealer. Five ways to save money when buying a brand new car when prices are high when it comes to any large purchase, the best way to save money is planning. It is essential to conduct research before you start looking for a vehicle, make sure you lock the financing you are able to afford and plan accordingly. In addition, with the cost of cars increasing, this could be the perfect moment to think about purchasing a vehicle instead of new. With our experts, Brian Moody, executive editor at Autotrader, shared his advice about how you can save cash regardless of the macro car buying environment. 1. Conduct a thorough research prior to visiting the dealership. Online resources have shifted the car buying greatly and allow you to be aware of the exact inventory dealers are selling before going in person. This is crucial with limited inventory. Make sure you check the availability of vehicles in your local area prior to visiting to the dealership in person. In the event that you are pressured to purchase a vehicle that you’ve not done enough research about. Moody suggests « doing most of your research online prior to visiting an actual dealership. » Pay attention to any extras or deals dealers may be offering. Two dealerships could be selling the same vehicle and one could provide better benefits, such as discounted maintenance, or free car equipment, Moody explains. 2. Apply for loan preapproval. This is an important step in the purchase of a new car. It locks in your expected monthly expenses with a prospective lender before you purchase the car. It is then possible to make a decision based on a solid knowledge of how much you’ll be spending. But when be sure to approach it in the same manner you would vehicle shopping — compare lenders and don’t sign off on the first option you see. As Moody explains, high prices make loan preapproval crucial to save money. Moody also suggests getting preapproved with your local financial institution or credit union. 3. Be mindful of your budget vehicle prices hitting close to $50,000, you should use your budget as your guide when shopping for a car. While it’s true that no matter the conditions, it’s important to stay within your budget, when prices are this high there isn’t much flexibility. To figure out how much you’re able to afford, use an to find your monthly finance cost. Don’t forget to take into the cost of your vehicle, such as and . 4. Consider leasing for the short-term if you have your sights set on a specific car that you are struggling to find at the dealership, could be a viable option to continue to take the steering wheel. « While leasing for the long term will cost more but leasing for a short period can let a buyer find the vehicle they are looking for at an affordable price, » Moody says. When the lease expires the economy is likely to be different and you may be able to better afford to buy a brand new vehicle. 5. Purchase a pre-owned vehicle if you have some flexibility, buying a vehicle instead of purchasing a brand new one can be an alternative. Not only will it make sure that you are able to drive away with a car and not have to worry about parking, but it can also result in savings. « Those looking for a great bargain should check out pre-owned vehicles, » Moody says. With such high demand for cars and a lack of inventory, new car prices will remain high. The current situation of the automobile market high vehicle prices are dependent on a variety of variables, including inventory availability and supply chain issues that remain and . All of these impact the cost that you are charged at the dealer. But Moody states that the primary influence right now comes down to supply versus demand. « There are just about one million brand new cars in dealerships across the country. » Moody says. « The used car inventory is more than double that. The lack of new cars coupled with the high demand is pushing prices to go up. » In addition to this, the actions taken by the government make borrowing money to purchase a new car costly also. Fourth quarter 2022 witnessed motorists taking out loans for 4 percent more their cars, as per . During the fourth quarter of 2021, those taking out auto loans financed an average of $39,834as opposed to the typical $41,445 car owners are financing in 2022. Due to the combination of high interest rates and expensive vehicles, you can expect to spend more money on the purchase of a new car. What happens when prices for vehicles return to their normal levels? The question of vehicle prices returning to normal is a bit more difficult issue. According to Moody, new inventory should start to stabilize by the the spring 2023. « There are many new models in the pipeline and some supply chain issues should be resolved by the time of 2023, » Moody says. In the meantime, you’ll have to be ready to conduct more research than normal and perhaps settle for lower than the dream car. However, just because there’s a limited inventory does not mean that you cannot leave the lot satisfied. The main point is that if you have the flexibility to wait on buying an automobile, it might be worth saving money. But if you’re like most Americans waiting might have to be a last resort. Consider buying a car with more caution and prepare to spend some more, even if you end up with a great deal. Learn more
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Authored by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ways and pitfalls of using loans to buy the car they want.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to manage their finances by providing clear, well-researched information that breaks down otherwise complex subjects into bite-sized pieces.
Auto loans editor
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