In the automotive industry, inflation comes in a two-pronged attack. The first is that there are fewer cars produced. The second is that car dealerships are marking up prices on the cars they have in stock.
Especially now that the Consumer Price Index (CPI) is at an alarming 40-year high, car affordability is at an all-time low. So, if you're in the market for a new vehicle this year, you need to be strategic about your purchase to ensure that you don't overspend.
Here are a few tips to help you buy a car during inflation:
1. Set a Budget
On average, new car prices are at $47,000. But, with inflation and dealer markups, you can expect to pay even more. So, set a budget before beginning your search.
Keep in mind all the associated costs of owning a car, including fuel, insurance, registration, and maintenance. And don't forget to factor in the down payment and monthly payments. With a budget in mind, you can avoid overspending when you purchase your car.
Extra tip: never spend more than 15% of your monthly income on car payments. For example, if you bring home $4,000 per month, your car budget should be $600. Although this may seem like a tight budget, following this general rule will help you stay within your means in the long run.
2. Narrow Your Search
There are hundreds of car models on the market today. To avoid getting overwhelmed, start by narrowing your search to a few specific models that fit your budget and needs. This will make the car-buying process more manageable and help you get a better deal on the car you ultimately decide to purchase.
Start by thinking about the type of car best suited to your needs. Do you need an SUV to accommodate your family of more than 4? Or would a smaller sedan be more practical for your daily commute? Once you've decided on the type of car, you can begin looking at specific models.
3. Order Straight From the Manufacturer
Here's a little-known secret: You can order a car straight from the manufacturer. Doing this is a great option if you have your heart set on a specific model.
The process is fairly simple. All you need to do is to find the model you want on the manufacturer's website and select the "order" option. Then, you'll choose your desired features and submit your order. That's it.
The best part about ordering directly from the manufacturer is that you can avoid dealer markups. Instead, you'll pay the sticker price set by the manufacturer.
Of course, one drawback to this option is that it can take several months to receive your car. But, if you're patient, you can get your vehicle at a lower price.
4. Get Pre-Approved for a Loan
If you're financing your car purchase, get pre-approved for a loan before heading to the dealership. This will give you a better idea of how much car you can afford and what interest rate you'll be paying. It's a good idea to shop around for car loans before settling on one.
5. Don't Expect Used Cars to Be a Bargain
With the current inflation rate, buyers may think getting a used car is more economical. But this isn't always the best option.
Not only are used cars more likely to have mechanical problems, but they're also subject to the same inflation rates as new cars. So, you may not be getting the bargain you're banking on.
Used cars can go as high as $29,000 in the current economy. So, unless you're buying a certified pre-owned car from a reputable dealership, you may be better off purchasing a new vehicle.
6. Be Prepared to Negotiate
Car dealerships are known for their high prices and aggressive sales tactics. So, if you decide to purchase from a dealership, expect to negotiate.
Start by researching the fair market value of the car you want to purchase. You can use online resources such as Kelley Blue Book or Edmunds.com to do this. Once you know the fair market value of the car you want, you can use this as a starting point for negotiation. Don't be afraid to walk away if the dealer isn't giving you the price you want.
The bottom line is that car shopping during inflation can be challenging, but it's not impossible. Despite the rising prices this 2022, there are still ways to get the car you want without overspending. Just be smart about your purchase, and don't let inflationary pressures force you into a bad deal.
By following these tips, you'll be sure to find the car of your dreams without breaking the bank.
About the Author:
Cedric’s writing draws on his rich life experiences, time spent traveling and years working with the written word. He is passionate about internet marketing, automotive, travel and the entertainment world. When not busy writing, he spends his time traveling, reading and keeping up with world events.