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4 min read Published March 03, 2023
Authored by Rebecca Betterton Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the ways and pitfalls of borrowing money to purchase the car they want.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to manage their finances by providing precise, well-studied information that reduces complicated subjects into digestible pieces.
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Buying a brand comes with the added perks of personalization, the latest technology and the sought-after new car smell. However, over the last few months, purchasing new cars has also carried record high prices. In fact, up 11.9 percent from around the time of last year. the average purchase price (ATP) was $48,000, as reported by . If you are planning to buy a brand new car planned for the future, you should be sure to take into consideration the best practices prior to going to find a dealer. Five ways to save money when buying a new car while costs are high when it comes to any major purchase the key to saving money is planning. It is crucial to conduct study prior to starting car shopping, lock in your financing and budget in line with. And with vehicle costs so high, now may be a good moment to think about buying a used car instead of buying a new. Together with our experts Brian Moody, executive editor at Autotrader, shared his advice on how to save money regardless of the overall car buying climate. 1. Research before heading to the dealership Online resources have changed the way you buy cars and allow you to know exactly what dealerships have available before going in person. This is particularly important when there is 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 forced to buy a car that you’ve not done enough research about. Moody recommends “doing the bulk of research online well before visiting an actual dealership.” Pay attention to any or extras that dealers may be offering. Two dealerships might be selling the same vehicle and one could offer more benefits like discounts on maintenance or free automobile accessories, Moody explains. 2. Apply for loan preapproval Loan is a vital step in the purchase of a new car. It secures your anticipated monthly expenses with a prospective lender prior to purchasing the car. It is then possible to look around with a clear understanding of the amount you’ll be spending. But when be sure to think about it the same manner you would car shopping — look at the different lenders and don’t sign off on the first one you are presented with. As Moody explains, high prices make loan preapproval essential to saving cash. Moody also recommends getting preapproved at your local financial institution or credit union. 3. Stick to your budget With car prices reaching close to $50,000, you should consider your budget as a guide when shopping for a car. Although it’s true that no matter the environment it is wise to stick to your budget, with prices that high, there’s not much to play with. To determine how much you’re able to spend make use of an app to determine your monthly finance cost. Don’t forget to take into vehicle expenses, like and . 4. Consider leasing for the short term If you have your sights set on a certain vehicle that you can’t find on the lot of the dealer, it is a good option to continue to take the car. “While leasing long term costs more, leasing for the short term can help a buyer obtain the car they desire at a cost that is affordable,” Moody says. When the lease ends the economy will likely be different, and you could be able to buy a brand new vehicle. 5. Purchase a pre-owned vehicle if you’re flexible, buying a vehicle instead of buying a brand new one can be an excellent alternative. It’s not just a way to make sure that you are able to take a drive in a car and not have to worry about parking, but it can also save you money. “Those who are looking for a bargain bargain should check out second-hand cars,” Moody says. Due to the huge demand for cars and a lack of availability, prices for new cars remain very excessive. The current situation of the automobile market high vehicle prices are dependent on a variety of variables, including inventory availability as well as supply chain issues and . All of these affect the price you pay at the dealer. However, Moody explains that the main factor currently at play is to supply versus demand. “There are just about one million new cars at dealerships across the country.” Moody says. “The used inventory of cars is nearly double. This shortage of new vehicles coupled with strong demand is forcing prices to go up.” On top of this, moves made by the government make borrowing money for your new car expensive too. In the fourth quarter, 2022 drivers financing 4 percent more for their cars, as per . In the 4th quarter in 2021, those who took out auto loans have financed on average $39,834as opposed to the typical 41,000 that owners of cars are financing in 2022. In the event of high interest rates and expensive vehicles, you can expect to spend more money on a new vehicle. Are vehicle prices returning to normal? The question of vehicle prices returning to normal is a slightly more complicated issue. But, according to Moody the new inventory will begin to normalize by the spring of 2023. “There are numerous new models in the pipeline and certain supply chain issues will be resolved by the time of 2023,” Moody says. So, until then, you’ll need to be prepared to do more research than usual and perhaps settle for less than your dream car. However, just because the inventory isn’t as plentiful doesn’t mean you can’t leave the lot feeling satisfied. The point is this: if you have the flexibility to wait on buying a new car this could be worth it to save money. But if you’re like most Americans, waiting may have to be a last resort. Instead enter car buying with some more study and prepare to spend a bit more even if you leave with a great deal. Learn more
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Writen by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ways and pitfalls of taking out loans to purchase a car.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers to manage their finances through providing precise, well-studied information that breaks down complicated subjects into bite-sized pieces.
Auto loans editor
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