Times are tough, but there’s no reason to lose hope. By following these key strategies, you can proactively eliminate some of the roadblocks you will face along the way, easing the search and purchase process.
Get prequalified. This is good advice during the best of times, but as especially now, says Jon Salzberg, director of Credit Karma, an organization that helps car buyers get a credit score and keep track of their personal auto financing. Getting prequalified gives the buyer a leg up in a negotiating process that is currently skewed in the seller’s favor. Since you’re likely to be paying more than usual for a car, the best deals to be found are in financing, he says.
Cast a wider net. If you’re searching local dealerships, look outside your geographic area for more options. You can also shop for cars using a number of online search tools that typically allow you to specify the distance you’re willing to travel to make a deal.
Leverage your existing car. Used car prices have never been higher, which means that selling or trading in your old car will make more of a dent in the price of a new car. Woolard says dealers are hungry for trade-ins. You may be able to net significant savings if you can buy something less popular, like a sedan or small hatchback; something with fewer popular features; or a front-drive SUV, rather than an AWD one. If you have an extra car you’re not using much, now is a good time to sell it. You can use the money to help finance a more expensive car now or in the future.
Be flexible. SUVs and pickups are immensely popular, and although Woolard says manufacturers are prioritizing these models as they attempt to ramp up production, there may be deals to be had among less popular models. He says that while incentives have dried up for popular models—in fact, some people are paying above MSRP—there are still incentives for small sedans and hatchbacks, even if the incentives aren’t as enticing as they were at the end of last year. Keep in mind that there won’t be as many available choices as there were last year. You may want a red car with heated seats and built-in navigation, but if you’re willing to make concessions, you’re more likely to get a car.
Fix your old car. Even an expensive repair like an engine rebuild or a transmission replacement may be worthwhile right now. If you’ve fallen behind on routine maintenance, get back on schedule, and stay on top of it so that your vehicle will last until the car market calms down again. If you can’t decide whether to fix it or move on, CR suggests figuring out how many months you want to keep the car, then dividing the cost of the repair by that many months. The monthly amount for the repair could be cheaper than the monthly payment on a new car. If you don’t have enough money to pay for a major repair up front, you may be able to find a shop that will finance the work.
Refinance your old car. If you’re inclined to wait for the market to change, Salzberg says the higher value of used cars can make it easier to get qualified to refinance your car loan. Credit Karma has found that consumers can save an average of $3,000—about $55 per month—over the life of the loan by refinancing.