Whether you’re planning on buying a new or used car, the ongoing pandemic has had a catastrophic effect on the car market. Various factors like factory shutdowns and part shortages have caused production to slow down, unable to cater to the rising demand. Because of the unavailability of new cars, most customers are opting for used cars, which have driven up prices significantly, with some models costing more than showroom fresh examples.
In such an unusual market, negotiations have become a lot harder, and most dealers are not budging from the sticker price. Even if you’re in the market to buy a used Nissan Versa or an expensive luxury car, you’ll end up paying a lot more than usual.
So, unless you absolutely need a car, it’s advisable to wait for the market to stabilize before investing in one.
When the pandemic started early in 2020, most car manufacturing plants around the world were shut down to prevent spread and because of less demand. Because of the shutdowns, fewer cars were reaching dealerships, setting the stage for the upcoming disruption of the automobile market. Soon after, when the world started lifting restrictions, there was a sudden demand for cars, both new and used since most buyers now preferred personal transport.
However, even as the factories started opening up, production was limited because of interruptions in the global supply chain. Important components like microchips control almost everything in a car from running an engine to the infotainment systems. In some areas, the disruptions are causing whole factories to shut down, severely affecting the supply of new vehicles.
As new cars were not readily available, customers started shopping around in the used car market, causing the prices to skyrocket. According to the online car marketplace, CarGurus Inc, prices rose by 6.9% from December to March alone, and are still rising. Usually, a car will depreciate 10% of its value right after driving it off the lot and another 20% after one year. But, with the current scenario, prices of used cars have risen so much that cars are actually appreciating in value. Pickup Trucks and crossovers are more in demand than smaller models, shooting their prices up higher.
Fortunately, despite all the chaos, if you follow some tips and take your time, there are still some good deals around. Here, we’ll give you some tips to find the best deal out there.
Do plenty of research
Thanks to the internet and modern technology, there are plenty of car buying websites online to help you find your next car. Because cars are in high demand right now, increase the search area, and if possible, check your nearby areas or even out of state to find a good deal. Also use various shopping tools to find the right car for you by entering details like mileage, body style, available features, and more.
Keep in mind that shopping outside your area might entail shipping costs, but it might end up cheaper overall.
Before negotiating with the seller, check the car’s current value and pricing information on websites like Kelley Blue Book. For a more peaceful ownership experience, certified pre-owned cars are recommended sincerely; they come with a warranty in most cases.
Don’t go overboard
Fortunately, the price rise is not equal among all body styles. Although the average price increase now stands at 26%, pickup trucks and crossovers are in most demand, causing them to cost a lot more than smaller models. According to a recent survey, prices of 3-year-old pickup trucks have risen by around $10,000 in 2021 compared to a year ago. Because of this variation, if you’re planning on buying a small car or SUV, the price rise should be average.
Take your time
Do not rush your next purchase. Do ample research, and wait for good deals before finalizing one. While the market is showing some signs of a recovery, the current situation is predicted to last quite a while longer, at least until the end of 2021. Negotiations are also harder in the current scenario, so taking a laid-back approach and contacting several dealers will get you a better deal instead of rushing in after finding a suitable car.
Keep the funds ready
Once you have set a budget, try to get a pre-approved loan from the bank to make sure you can close the deal fast. Contradicting the point above, because of the upturned market, always be ready to finalize a deal quickly before it’s gone. The high demand has caused used cars to fly off the shelves, making it harder to find the right model you’re looking for. So, if the right one comes along and ticks all the right boxes, act quickly and get the deal to avoid waiting a long time for the next one to come along.
Do not limit yourself to a certain model
Since the demand is significantly higher than usual, always be flexible with your requirements. From basic choices like color and mileage to the features on offer, finding the right car is harder than before. If you limit yourself to a certain model, finding one will be very difficult. Instead of needs, always consider wants, which will significantly increase the search pool and help you find a deal quickly.
Negotiating with dealers and private sellers
Whether you are planning to buy from a dealer or a private seller, negotiations have become a lot harder because of the sudden spike in used car prices. But, if you negotiate correctly, you may be able to bring the prices down, especially if they have an urgent requirement for money.
In general, negotiation will be easier with a private seller, leading to a better deal but you won’t get a warranty with the purchase.
However, if you’re negotiating with a dealer, always ask for a warranty with the purchase. Dealers will also offer a range of choices compared to private online listings, allowing you to do in-person research and find the right car. Dealers will also inspect most cars they sell since they’re governed by certain rules and regulations. Some might even accept a return if the car faces multiple issues. In any case, certified pre-owned cars are the best option, but they will cost a lot more.
So, in conclusion, by following all these tips, you’ll be able to get a better deal when shopping for a used car in today’s market. The current situation is expected to last quite a while longer, so a simple tip is to wait a while and check if the prices come down, although the chances of it happening for this year are slim to none. Usually, used car prices are highest during the spring tax refund season, and prices will start to fall by summer. Following this pattern might help when you plan the next purchase.
