Although new car costs have fallen over the past year, they are still on average about 30% higher than they were before the pandemic. This, along with higher interest rates, can still make it difficult to buy.
The good news is that in general, new cars abound in dealerships right now. Availability is up more than 54% from the previous year, says Pat Ryan, CEO of CoPilot, an AI-powered car grocery shopping app. The result is that cashback offers and financing incentives have once again come into play, especially among electric vehicles. Models with higher availability offer more attractive incentives because dealers need to get rid of them, Ryan says.
“If you’re in a position to start buying an electric vehicle, there’s almost never been a better time to buy one,” he says. “Consumer interest in electric cars has waned in recent months and costs have fallen by approximately $5,000 on average this year. “
Consumer Reports is no stranger to buying new cars. Relying on our team of secret buyers, we usually buy between 40 and 50 new cars each year to check the most popular models and versions, and we face the same demanding situations as other buyers. However, unlike a few years ago, when we were paying thousands of dollars above MSRP for maximum models, most of our recent acquisitions have been made at or below list price.
Gabe Shenhar, associate director of CR’s automotive testing program, notes that if you’re buying a new or redesigned model, especially one that’s highly anticipated by the buying public, you’re much more likely to pay above the label. You also have to take into account that buying a first-year model leads to more reliability problems because the automaker has not had the possibility to correct the errors,” he says.
As brands have prioritized more expensive models and premium trim levels in recent years, it’s harder to find affordable new cars. Still, according to the latest Consumer Price Index report from the Bureau of Labor Statistics, new car costs have fallen about 1% on average since last year.
If price is an issue, a smaller car or one with fewer features might be an option. But for someone who wants something more expensive, like an SUV, pickup truck, or three-row minivan, manufacturer-subsidized financing for new cars (for qualified buyers with smart credit) can make the acquisition more affordable. All you have to do, Shennar says, is look for CR models with the most productive incentives.
As savvy CR shoppers have discovered, the car you need is available somewhere. It’s about being patient and flexible. Especially since automakers have prioritized more expensive models and higher equipment levels.
“It’s a smart concept to focus on the style you want, identify the imaginable alternatives, and know what all the must-haves are and how much they charge,” Shenhar says. “Do your homework. Learn the difference between the racer’s charge and MSRP and locate two or three cars by searching the manufacturer’s online page or websites like TrueCar or Cars. com, for example. (TrueCar is a CR partner. )
If you find the car you need at a moderate price and with favorable financing or leasing terms, you’ve already won part of the battle. Our top recommendation for buyers in this tricky market is to negotiate wisely.
Arrange financing in advance. Determine your budget and download financing based on what you can pay per month and in initial payments. It’s always a good idea to get financing from your bank or credit union before going to a brokerage to buy cars. This gives you a baseline against which you can compare the broker’s financing terms, which may or may not be a smart deal. Sometimes broker financing has manufacturer subsidies that allow the broker to offer a lower interest rate than he can get from his bank. Having financing capable of being approved will also give you an advantage if you’re looking for an attractive car that probably won’t stay on the dealership for long.
Don’t pay too much. If you paid more than a small percentage over the MSRP, what will be charged for the car if you market it in one day. For example, if you buy an SUV that depreciates $15,000 off the tag charge in 3 years and you paid $8,000 more than the MSRP this year, that means you’ll be charged $23,000 to own it during this short period. Cars depreciate assets; Paying too much for a new car will likely worsen your losses in the long run. (Check out today’s worst car deals. ) You don’t need to get a loan for a car that will lose a lot of fees for years to come, or you could find yourself underwater with the loan when you have to pay more than the car is charged for an extended period of time. This challenge can be made worse when you buy your next vehicle, if you carry over old debts to the next loan.
Find out what you can get. If you’re shopping for groceries for a new car, the dealerships near you may not have exactly what you’re looking for. Instead of going to the dealership to see what they have, search their stock online or call first. You may want to research dealerships to find anything that comes close to what you’re looking for. Websites like TrueCar, Car Gurus, and Cars. com can show you what’s available in a specific geographic area.
Consider an electric vehicle. Many brands bet big on electric cars over the past two years and made more cars than consumers ultimately wanted to buy. As a result, you’ll most likely find plenty of deals and incentives on new and gently used electric cars. For example, Ryan says Kia offers 0% financing for the EV9. Incentives tend to be replaced from month to month, so it’s worth checking back if you’re interested in buying them. (See the most popular cars for sale right now. )
Expand your geographic search. If the dealers where you live don’t have the car you need, check out dealers outside your area. However, be careful not to cast your net too far. It is necessary to be able to see the car and check how it drives before signing a sales or rental contract, especially for used cars. And with the market as hot as it is now, the car you’re looking for might not be there if you have to go too far to get to it.
Do your research. Whether you’re shopping for a new or used vehicle, check out CR’s roadside tests and ratings for reliability, owner satisfaction, and safety. You need a short list of competitors to try, and even more than before, you need a clever understanding of the other models and features, because you won’t possibly find your dream setup at the dealership. Print out the CR. org and manufacturer’s website data for reference and note-taking.
Buy anything you trust. Especially if you’re forced to buy something more expensive than you otherwise would, your most productive bet will probably be to stick with the new car for the long term. Check CR reviews and ratings to make sure you buy something reliable that won’t cause you trouble in the future. (See our car reliability advisor. )
Commitment to a certain extent. Even if the dealership offers you the style you need, the car may not have some of the features you’re looking for (and possibly have more than you need or need). Decide which features are really vital and whether a vehicle has them. Not having them all means you deserve another car.
Consider your industry. Upgrading to a vehicle with greater fuel efficiency, newer protection features, and even more comfort or taste can be a compelling explanation for why you should buy a new car. If you have a car to market or sell before buying something new, you would. Possibly it’s still to take advantage of its cost compared to the maximum value of new cars. Additionally, a recent CR survey found that most people who sold their old cars received more than expected through promotion to a dealership like Carvana or CarMax.