The current auto market is a strange one. With shut downs and supply chain issues, new car production has plummeted. This means that new car prices are higher than ever, leaving little negotiation room at the dealership. Even worse is the effect on the used car market.
With no new cars available for replacements, vehicle owners are holding on to their cars and trucks much longer. In addition, rental companies, who usually flood the market with used cars are holding on to them longer and even buying used vehicles as replacements. This means that used cars are more valuable than ever. A great thing if you are selling a used car as you may be able to sell them for more than you purchased them. If you are looking to buy a used or even a new car however, it is not a great market to be in.
We still need to drive though, so if you need a new or used vehicle, what are you to do? Here are some possible options.
Hold On To Your Car
Your first option is to simply hold on to your current vehicle. This might not be the most appealing option, but it may be the smartest. Sure, today might seem like a good time to sell your used vehicle, to take advantage of the high values, but the replacement costs will more than offset that high sales price. Plus, the limited selection means that you are very unlikely to get the exact vehicle that you are looking for.
If you feel like your vehicle could last at least two more years, you should consider keeping it for the time being. It is estimated that the supply of new cars and used cars will rebound in a couple of years and then you will be in a good position to make a purchase. As always, patience is an important part of smart budgeting.
Fix Your Vehicle
But what if you have a vehicle that needs work? You might have the urge to dump it before things go really bad and get expensive, but this can cost you.
If the repairs needed are minor to moderate, the best idea may be to fix your car or truck and keep it running. Spending 2000 dollars on repairs is a better option than trading for a car that you do not want or spending 5000 dollars more than it would have been worth a few years ago.
So, for those of you with repairable cars, hold on to them and spring for the repairs.
Buy A Lower End Model
If you absolutely must purchase a vehicle in this market, a good option would be to set your sights lower and also to buy new. You still can find new cars, but you have to be smart about it.
Used luxury cars and high end trucks are selling for record numbers and this type of purchase should be avoided. A better option would be to turn to the dealership for a lesser vehicle than you might ordinarily pursue.
Forgo all of the bells and whistles and step down to a simpler, cheaper and likely easier to maintain vehicle. When you take this step, the best way to go about it is to order your vehicle and skip the lot. You might have to wait a few months for delivery, but you will not have to fight for a vehicle already on location that will probably come with a bunch of expensive dealer ad ons.
Turn To Alternate Transportation
Last, but not least, perhaps now is a time to re-evaluate how much you really need a vehicle. This is an especially viable option if you are currently in a two car household.
Do you have mass transit in your area? Do you only drive a few times a week? If so, it might be the best option to sell your current vehicle now and forgo replacing it. You can then use mass transit and the occasional Uber or Lyft. Even with the costs involved, you will likely come out ahead of spending money on a car payment, insurance, fuel and maintenance.
Once car prices come down in a few years, you can then evaluate whether it is worth the expense to once again become a car or truck owner. In the meantime, you will save thousands of dollars a year on car expenses and can sell your current vehicle for a premium.