Shopping for a new or used car has been tough over the past year or two. Inventory shortages, car pricing hikes, and fluctuating interest rates have made navigating the car-buying process tough for many consumers. Fortunately, there are experts like Ari Janessian – an auto broker with Negotiation Guides – to offer up car buying strategies for anyone looking to purchase a car in 2022. Here are seven tips that he suggests.
Tip No. 1: Trade your car to the dealership that you’re buying the new car from
If you’re looking to trade your current car for a new one, then try to keep the transaction all at one dealership. This may sound like a no-brainer, but is it possible to sell your car to a dealer and then buy the new car you want from a different one. Instead, keep everything under one roof to get the best possible deal.
“The (dealership) will want to try to use your car for additional profit after you drive off with the new car,” Janessian said in the video he posted.
By trading your current car into the same dealership that you’re buying the car from, there’s a good chance that they will give you a better deal on the car that you’re buying since you’re adding to their used-car inventory as well.
Tip No. 2: Shop around your car’s trade-in value at third-party sites and dealers
Before making the final deal on your trade-in, it’s a good idea to shop around for the best trade-in value for leverage. “Shop around for the trade-in value before agreeing to the final deal,” Janessian says. A few good places to start are sites like KBB.com, CarMax, Carvana, or Vroom. These sites will give you a value right away and you’ll be able to show that valuation to the dealership that you’re doing business with and possibly get them to match it.
Tip No. 3: Avoid leasing a car in today’s current market unless it’s necessary
Manufacturers used to incentivize leases by throwing in “lease cash” or rebates or by offering low-interest rates – also known as the “money factor.” However, that is no longer the case.
“Now that there’s no need for them to unload a bunch of cars that they don’t have, they don’t need to incentivize these leases,” Janessian said. “What that results in is very high lease payments because you’re paying for depreciation plus a good chunk of it is interest.”
Instead of leasing, Janessian recommends financing the car for three years, keeping it in good condition, and then trading it in after three years. Depending on the make and model that you’re buying, there’s a good chance that you will pay the same type of monthly payment when financing a car for three years in comparison to leasing one right now.
Tip No. 4: Avoid buying European cars right now
This tip is pretty simple. Janessian says that European cars are being marked up way more than their Asian and American counterparts. “If you’re looking for a decent deal, stay away from European brands,” he says.
Tip No. 5: Buy a car at MSRP or less
Not too long ago, car buyers were sitting across from salespeople and negotiating car prices that were way below the invoice price. Unfortunately, those days are gone and in the current market, you’ll be lucky if you can pay the MSRP on a new car.
“Getting a car for the window sticker price is considered to be a win in my book,” Janessian says. Many dealers are marking up their inventory to adjust for the market demand. If anything, do your best to negotiate any marked-up prices down to the MSRP and you’ll be ahead of the game.
Tip No. 6: Avoid used cars that are in high demand and cast a wide search net
If you’re shopping for a used car, then you’re likely aware that the prices are increasing all across the board. If possible, try and avoid buying any rare or high-demand used cars at this time as they likely won’t be worth the price you’ll pay. Some examples include sports cars and some high-end luxury cars.
Also, in order to get the best price on a specific used make and model that you’re looking for, consider expanding your search to outside of your local vicinity or state as different regions will have different prices.
Tip No. 7: Get your financing figured out
When shopping for a new or used car, it’s important to get your financing figured out beforehand. You shop around for the best rate possible by checking with your personal bank or credit union first to see what rates they have to offer. If you can lock in the financing beforehand, then you can essentially shop like a cash buyer when you set foot into the dealership.
Sure, you can always take whatever financing terms that the dealership can find for you, however, it may end up being at a higher interest rate and you might have to make the decision quicker than if you did the research yourself.
“If you walk into the dealership without financing, you may be put in a situation where you have very little time to figure out what you’re personally capable of,” Janessian says. It’s better to take your time and shop for financing terms on your own as opposed to feeling pressured to take what the dealer has to offer.
Shopping for a car in 2022 takes more research
Ultimately, if you’re planning to buy a new or used car this year, it’s a good idea to do all of your research before setting foot into a dealership. Do your research on the car that you’re trading in, the car you want to buy, and the available interest rates. That way, you know that you’re getting the best deal possible during these crazy car-buying times.
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