- Buying a new car in this inflated market is tricky but not impossible, Consumer Reports says.
- The best bet for most consumers is to delay buying a car.
- That means forking over extra for repairs or buying out a lease, according to the nonprofit outlet.
If you’ve browsed an online car marketplace or read the news over the last 18 months or so, you’re probably aware that car prices are completely and utterly out of control.
Values plummeted early on in the pandemic as economic uncertainty and the fear of infection kept buyers at home. But since then, demand has exploded and prices for both new and used cars have surged higher and higher.
Several new vehicles are selling for above MSRP and used models on the wholesale market are going for over 40% more than they would have in February 2020, according to Manheim Auctions. It’s gotten so bad that nearly half of people interested in buying a car are calling it quits for now and are waiting for prices to come down, a recent Kelley Blue Book survey suggests.
That’s probably a good idea, according to Consumer Reports.
“Our advice is if you can wait, that’s probably your best bet,” Ben Preston, an automotive reporter at the nonprofit outlet, told Insider.
With car prices at unprecedented levels and set to stay there for the foreseeable future, Preston recommends that consumers hang on to their existing vehicles rather than hoping for a deal. The global shortage of computer chips that’s at the heart of the ridiculous pricing doesn’t seem like it will resolve itself anytime soon. That means new cars will be in short supply and used ones will be in high demand for months — possibly years — to come.
An expensive repair that would’ve forced someone to ditch their car for a new one 18 months ago could make financial sense nowadays, Preston says. Replacing an old vehicle is pricier than ever, so a $3,000-$4,000 transmission, for instance, could make sense depending on how long the owner plans to keep driving that vehicle. If coming up with the cash is an issue, owners can shop around for repair shops that offer short-term financing.
The same goes for leases.
If you are nearing the end of a lease, it could be a good idea to hang on to the vehicle by buying it out, Preston says. Lease agreements stipulate a price that the lessee can buy the vehicle for at the end of the two or three-year term based on its projected residual value. Because nobody could have predicted how values would spike in 2020 and 2021, buying out a lease could be a good way to secure a vehicle at below-market prices.
Shoppers who can’t wait should look for less popular models and be prepared to make some sacrifices on age and options, Preston says.
“It’s going to be tricky to buy a car right now,” he said. “It’s not impossible.”