Pandemic shutdowns affected many industries and caused supply chain issues and rising interest rates, but few have changed more than the auto industry. Nearly everything about buying a car post-pandemic is different. Understanding these changes helps when making a car-buying strategy. Here are a few ways buying a car is different in 2023 and how to get the best terms.
Negotiation
For many dealerships, the sticker price is now already the lowest offer, but car buyers can still get creative
during negotiations. Asking for processing fees, warranties, extras or matching another dealership’s price is still possible. Dealerships need to move inventory to stay in business, so don’t be afraid to ask for what you want.
Trade-in vs. selling privately
Since new cars are more expensive and harder to find than they used to be, many people are choosing to keep their existing vehicles longer. This trend has caused a severe decline in the number of trade-ins. For this reason, dealerships are offering top dollar for trade-ins. Most dealerships are willing to quote a price to buy a vehicle even if the owner is not buying a car. This price may be high enough to save the time and effort of selling it privately.
Online car buying
Studies report that 50% of new cars were sold online. That shift in the market has changed the way people search for cars to buy. There are many car websites that allow buyers to shop across multiple dealerships. Though many of these websites offer financing, it is a good idea to compare the rates of your local credit union before visiting the dealership. The interest rates offered by credit unions are frequently the lowest available rates.
Do your research
One constant in negotiating is knowledge. Knowing the value of your trade-in, how much others have paid for the same car and which dealership is offering the lowest price are all things that can be found online. Websites such as CarGurus, TrueCar, Kelly Blue Book and Edmonds allow buyers to research factors that affect the overall quality of a car deal.
Some things stay the same
Though car-buying is different today, it is also very much the same. The option to test drive may look differently when buying online but it is still possible. Looking at the total cost of buying the vehicle including interest, maintenance, insurance and repairs is important when determining the total cost of ownership. It is possible to maintain financial health while buying a car but only if the new car fits into your unique money situation.
Article by Tina Herndon, TFCU Financial Educator
About the author
Tina Herndon began her financial career managing three native not-for-profit loan funds and completed a financial counseling session with each loan closing. She served as the Financial Education and Training Manager for the national nonprofit financial counseling and education service, BALANCE, where one of her responsibilities was main presenter. In 2022, she joined the Financial Empowerment team at Tinker Federal Credit Union (TFCU) as a Financial Educator. Learn more about TFCU’s Financial Education team here.