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4 minutes read Read Published March 03, 2023.
Written by Rebecca Betterton Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping 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 writing and editing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to take control of their finances through providing precise, well-studied information that breaks down otherwise complicated topics into bite-sized pieces.
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Buying a brand comes with the benefits of personalization, the most recent technology, and that coveted fresh car smell. But over the past several months, purchasing new cars has also carried record high costs. In fact, up 11.9 percent from around this time last year, the average purchase price (ATP) was $48,000, as reported by . If you are thinking of purchasing a new car is planned for the future, you should be sure to take into consideration the best practices prior to setting out to find a dealer. Five strategies to save money when buying a brand new car when prices are high When it comes to any major purchase, the best way to save money is to prepare. It is important to do research before you start car shopping, lock in the financing you are able to afford and plan according to. In addition, with the cost of cars at an all-time high, it might also be a good time to think about buying a used car instead of new. Along with our experts, Brian Moody, executive editor at Autotrader offered his suggestions on how to save money regardless of the macro car buying environment. 1. Conduct a thorough research prior to visiting the dealership. The internet has shifted the car buying greatly and now enable you to find out exactly what dealerships have available before you visit the dealer. This is especially important with the fewer inventory options available. Find out if vehicles are available in your local area prior to visiting to the dealership in person. If you don’t, you could be pushed to purchase a vehicle you haven’t done enough research on, Moody recommends “doing the bulk of research online well before visiting an actual dealership.” Pay close attention to any or extras that dealers might offer. Two dealerships might offer the same car however one might provide better benefits, such as discounted maintenance, or free vehicle equipment, Moody explains. 2. You can apply for loan preapproval Loan is a vital step when buying a new car. It secures your anticipated monthly cost with a potential lender prior to purchasing the car. You can then shop with a firm knowledge of how much you can spend. However, you must take it in the same way you approach when shopping for a car — you need to compare lenders, and don’t decide on the first option you are presented with. As Moody says, the cost of loans is high. are what make loan preapproval crucial to save money. Moody also recommends getting preapproved at your local financial institution or credit union. 3. Keep your budget in check car prices reaching close to $50,000, you should make your budget your reference when you are shopping for your next car. While it’s true that regardless of the circumstances, it’s best to stay within your budget, but with costs such as these, there’s no flexibility. To determine how much you’re able to afford, use an to find your monthly financing cost. Remember to factor in vehicle costs, like and . 4. Consider leasing for the short term If you have an eye on a specific car that you can’t find on the lot of the dealer, it can be an effective way to continue to take the steering wheel. “While leasing long term costs more than leasing for a shorter time frame can allow a buyer to get the car they want at a reasonable cost,” Moody says. By the time the lease ends the market is likely to be different and you might be able to buy a brand new vehicle. 5. Buy a used vehicle If you are flexible purchasing a used car instead of buying a brand new one can be an excellent alternative. It will not only ensure that you can actually 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 deal should look at pre-owned vehicles,” Moody says. Due to the huge demand for cars and a lack of inventory, new car prices will continue to be high. The current state of the market for cars high vehicle prices are influenced by a number of factors, like available inventory and supply chain issues that remain and . All of these impact the price which you will pay in the dealership. But Moody says that the biggest influence right now comes down to supply versus demand. “There are only about 1 million new cars available at dealerships across the country.” Moody says. “The used cars on the market are nearly double. This shortage of new vehicles coupled with strong demand is forcing prices up.” In addition to this, moves made by the make borrowing money for your new car costly also. In the fourth quarter, 2022 people financing 4 percent more for their vehicles, as per . The fourth quarter of 2021 those who took out auto loans financed an average of $39,834 — versus the average $41,445 car owners are financing in 2022. In the event of high interest rates and expensive automobiles, you could be expected to spend more on a new vehicle. Will vehicle prices return to their normal levels? The question of car prices returning to their normal levels is a more complex issue. According to Moody new inventory is expected to start to stabilize by the the spring of 2023. “There are a lot of new models on the way and some supply chain issues will be resolved by the time of 2023,” Moody says. Until then, you’ll need to be ready to conduct more research than you normally would and may end up with lower than the dream car. But just because there’s only a small selection of cars doesn’t mean you can’t leave the lot feeling satisfied. The point is this, If you’re willing to hold off on purchasing the latest car this could be worth the cost of saving. But if you’re like most Americans waiting might have to be a last resort. Consider buying a car with some more study and prepare to spend a bit more even if you end up with a good 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 to navigate the details of taking out loans to purchase a car.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers feel confident to take control of their finances with clear, well-researched information that breaks down otherwise complex topics into digestible chunks.
Auto loans editor
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