Moreover, throughout the pandemic, the government has doled out billions in financial incentives to stimulate the economy to business owners, gig workers, parents with young kids under 18 and to most taxpayers, in order to steer clear of another Great Recession. While there is a segment of the population that has been impacted by the hardest hit areas of the economy: travel, hospitality and the restaurant industry, there is a segment of society, who hasn’t missed a beat, in terms of their income, with the ability to work from home all while taking care of their kids. With this being the case, according to J.D. Power Insights, the sales of new vehicles in the U.S. priced above $80,000 more than doubled in the first five month of 2021, when compared to the same period in 2019.
Furthermore, the average transaction price of a new vehicle has risen to $40,768, while used car prices have surged to a record high of $22,568. And new vehicle incentives, in many cases have literally slid backwards when compared to the same periods in both 2020 and 2019.
For consumers, who might be in need of a vehicle, here are several ways they can remain in the driver's seat.
If you’re planning on financing a car, read "Ten Steps to Getting the Best Car Loan."
Unless one is paying cash, get pre-approved. With the average new vehicle loan amount, rising from $33,833, during the first quarter in 2020 to $35,392, according to Experian, a credit union or possibly a bank could help one save in terms of their monthly payment. Usually when buyers enter into the last phase of car-buying, which is the finance department, they let their guard down. There have been numerous studies detailing how minorities are targeted in terms of predatory auto lending finance practices. Access a credit union or bank first. Use that as a negotiating tool before heading to a dealership. Also consider saving up a down payment too, helping to reduce both the payment and the term. All of these factors combined could lead to big savings.
Keep your options open. For those who are hyper focused on a color or options, it could mean the difference between landing on the right vehicle or spinning your wheels in frustration. Consider competitive vehicles in the segment. If one’s heart is set on a preowned Escalade, consider a Navigator. You might end up getting more bang for the buck. Also be open to driving out of town too, if it makes sense to get a better deal. In fact, during the month of June over 70% of new vehicles sold for MSRP or more.
Shop new vs used. There are times in this current economy, where the used car prices might be priced on par with new vehicles. Until this current climate, never before has so many used car prices appreciated. In short, shop new vs used before pulling the trigger. There has been cases where the new vehicle, with no miles on it might cost less than a 2 or 3 year old vehicle with 30,000 to 45,000 miles on it.
If you’re trading-in a used car, you’re in the driver’s seat, especially if its paid-off. There are a number of Tv ads where there are car companies like Carvana, an online used car buying service, who want to purchase your vehicle, without you buying from them, especially if its in great condition. With that said, shop your vehicle around to a number of dealers, before pulling the trigger. You’re in a better position to do such, if the car is paid-off and/or if you’re not upside down, owing more for the car than what its actually worth in the market.
Consider leasing. For those who can drive within a specified mileage and don’t mind continuous payments, this could be an option to buying a new vehicle. Before Covid-19, three out of ten new vehicles were being leased. Leasing typically cost less than traditional financing. It’s a great opportunity for those with good credit, who want to be in a new car every 2 to 3 years, outfitted with the latest technology. Also, if you opt to lease, consider placing no money down. In case you’re in an accident and the vehicle is totaled, you won’t recoup the money back. Leasing penetration has ranged from a low of 15 percent to a high of 45 percent based upon the region of the country one resides.
Avoid keeping up with the Jones. Find those segments where most consumers are steering away from. The average transaction price (ATP) of the restyled Cadillac Escalade is over $100,000. Most consumers these days are trading-in their vehicles for trucks, SUVs and those crossovers that sits up high like a truck, but still rides like a car. Consider a car or possibly an electric vehicle outside of the hot-selling Ford’s Mach-E. This could be where you can actually secure savings. There has been a trend over the past few years, where cars, sedans and coupes account for less than 30 percent of what consumers are buying these days.
Take advantage of college graduate incentives too.
And to stay connected to the auto industry, tune in to Auto Trends with JeffCars.com.
By utilizing the aforementioned tips, this should help to keep consumers in the driver’s seat, despite the shortage of vehicles in the marketplace.