One of the fallout from COVID-19 is a semiconductor shortage. This shortage means fewer new cars being manufactured and a greater demand for used vehicles. And this is where things get sticky.
According to Car and Driver, the cost of a used vehicle has increased by 30% since the same period last year. Equally spectacular, used car prices have increased 17% in the past five months. In fact, the average price for a used car hit $ 22,568 in May, an all-time high for used vehicles.
While it can be difficult to find a good deal on a reliable used car, it is not impossible. These tips are designed to give you a fighting chance when shopping for a used car.
1. Reduce the size
It may be time to change strategy. Think about the vehicle you probably would have wanted to buy had there never been a shortage of microchips and the price of used cars hadn’t skyrocketed. If it’s a pickup truck or an SUV, it can be hard to find what you’re looking for at a decent price. The demand is simply too great and the supply too limited.
According to Forbes, the price of used microphones goes through the stratosphere. For example, a 2018 Ford F-150 pickup now costs almost $ 10,000 more than a 3-year-old model cost last year. However, the prices of small SUVs and crossovers have not risen as dramatically.
You may want to consider a less demanded model that interests you. Kelley Blue Book is a good place to start. The vehicle valuation company compiles a monthly list of best used car deals. The idea is to use a list like this to spark your imagination and find out if another vehicle could inspire you. The bonus is that the cars on Kelley’s list are available at a reduced price.
2. Get the most out of the sale of your vehicle
Today’s high prices may spell bad news for those looking to buy a car, but now is a great time to be a seller. The premium you earn by selling your vehicle can help balance the extra money you may have to fork out for another used car.
3. Disseminate the research
There was a time when there were three main ways to find a used car: visit a used car fleet, browse the classifieds, or buy from a friend. Today your options are wide open.
In addition to lots of cars and friends, you have dozens of online shopping tools. In fact, you can shop from anywhere in the country and have the car shipped to you. Sites that allow you to buy vehicles that suit your style and budget include:
- Tred (a peer-to-peer sales site)
In addition to these sites, keep looking for cars for sale by owner because you can find a reasonable price there. Wherever you buy, retain the right to have the vehicle thoroughly inspected before finalizing the transaction. This way if there are any issues you know how much it will cost to make repairs and can decide whether or not you really landed a good deal. While you’re at it, you can even get an auto loan from the comfort of your own home.
If you need wheels now but want to wait for prices to stabilize, consider leasing a car for a year. Yes, you will have to put in the money, but your monthly payment will be less than it would be with a purchase. Take advantage of your lease for a year before you start shopping for good. Hopefully you will have a clear idea of what vehicle you want at that time and the price will be manageable. And, if you keep your monthly rental payment low enough, you’ll have another year to save for the other costs associated with owning a car.
Caution : Generally, leasing a car is not your best financial shot. However, these are unusual times and leasing could work in your favor. Before you decide, add up all the costs associated with the rental (including down payment, fees and monthly payment). Compare that price to what you’ll spend this year if you buy a car (including down payment, fees, and monthly payment).
5. Consider waiting a year
Finally, if you can make your current car last a little longer, do your best to make it happen. The price of used vehicles is doomed to fall (or almost) to the prices before the pandemic eventually. The wait could lead to a plumper savings account and a bigger down payment.
As you know, there is more to owning a car than paying monthly installments. You must also pay for car insurance, maintenance and upkeep. Through it all, you want to enjoy your ride. Don’t let the hunt for the “right” vehicle put you off. Remember you have options.