A consumer visiting any used car dealer website sees that just about every car’s price almost hits the moon. The market’s genesis was before the chip shortage when auto companies were suffering poor sales due to Coronavirus. No one was buying, so the automakers decided they weren’t going to order any more semiconductors. Now that the chip shortage is steaming ahead, carmakers are at the back of the line.
Consumers looking to buy a car are setting their sights on the used market, which jacks up the prices. Because demand is so high, dealerships aren’t likely to negotiate. It’s a vicious pickle to be stuck in the middle of as a consumer, but thankfully there are a few ways to get around the prices.
Look for cars not selling
Dealership websites show when they posted each car. The more amount of time a car’s been up for sale, the more likely the dealership will offer a deal. It’s an old technique for buying a used auto but apparently can still make headway today. Dealerships are interested in turnover, so when a car’s been sitting on the lot for an extended period of time, it’s taking the place of another car the dealership could potentially get its hands on. While this is less effective today, the dealership may bend on the price if the car has been sitting for 30-60 days.
A good credit score can help with the loan
Auto buying isn’t always as simple as handing over some cash and receiving a title. Unfortunately buying a vehicle sometimes requires a loan, and with that comes an interest rate. An ideal credit score, which lands somewhere between 750-850, will net the best terms for an auto loan. A good credit score can help secure a low-interest rate, thus saving money down the road.
It’s a seller’s market
All of this shakeup means it’s a seller’s market. Dealerships are offering money for their previous customers’ cars, which means they’re hard-up for inventory. In the current climate, a consumer has a good chance of getting more money for their car, than they would under normal circumstances. When auto inventories are back on track and prices have leveled, a consumer may not be able to get as much money.
Be flexible with time and choices
This surge in market prices will calm down eventually, so until then anyone who already has a car can sit comfortably and wait. For those who don’t have a car, it’s important to be flexible. If looking for a sports car, consider one a few years older, or a brand that’s not in high demand. While looking for a sedan like a Honda Civic, consider something less popular like a Hyundai Elantra. If the consumer absolutely cannot wait, then compromises must be made.
Remember, this chip shortage will probably end within the next 18 months, according to Time. With this in mind, and in this market, the best way to save money on a car purchase is abstinence. But if it cannot wait, then improve that credit score, and save for a bigger down payment, and make compromises.