With stimulus checks hitting bank accounts nationwide and summer road trips in full swing, it’s possible car dealerships could see an increase in the number of people eyeing the perfect new vehicle.
After being holed up in the same location for a couple months, it seems only natural to want a more reliable set of wheels for hitting the road again, whether it’s just to and from work or heading out on that long-overdue cross-country getaway. But is now the right time to find a new ride?
1. As economic challenges rise, prices fall
According to car auctioneer Manheim, April used car sales fell 34.4% from 2019 and used car wholesale prices fell 11.4% but began to recover toward the month’s end. However, one Illinois car salesman with a 30-year tenure says he doesn’t see car-buying changing much in the recent climate.
In fact, his dealership sold almost exactly the same amount of cars this year when compared to last year at this time.
“People are doing more research over the internet, and many times call for an appointment knowing what they want when they arrive,” he said. “I think here in the Midwest people are ready to get back to a more normal way of life.”
With businesses, restaurants and parks gradually reopening to the public, drivers actually have places to go.
“Our inventory is low at the moment because we haven’t been receiving any vehicles from factories for a couple of months,” our source said. “They’re just now starting to produce again, so I advise people to buy while there’s still somewhat of a selection. Now is a great time to buy.”
2. Can you afford a car, even at lower prices?
Beating the masses to the lot may seem an easy feat. But the next hurdle is paying for a new vehicle. If you can pay cash up-front for your car, high-five. But for many people, a loan is simply the best (or only) way to purchase a new vehicle.
Different types of loans work better for different individuals. While longer-term loans with lower monthly payments may sound appealing, they tend to have higher annual percentage rates (APR). Over time, that lower payment can result in paying more for the car due to the higher APR, negating the great deal you may have snagged.
On the flipside, a shorter-term loan means larger payments each month, but also a lower APR. If your budget can afford this option, you’ll pay less for the car than if you’d opted for the longer-term loan. Our auto calculator may help.
3. You can buy it, but can you drive it?
A new set of wheels and the freedoms that come with it (like leaving your house for any amount of time, who cares where) may tempt you to jump on the opportunity to buy now, be wary of slowdowns.
When purchasing a car from a dealership, they usually handle title and registration paperwork. But buying directly from an owner puts this task on your plate, which has recently become more difficult in nearly half of the states. For example, an in-person signature is required, and offices may have limited hours. This could mean long wait times or other administrative delays in receiving the paperwork you need to drive your new car.
Plus, a vehicle registration can set you back anywhere from $8-$225 or more, depending on your state and vehicle.
4. Before you buy, consider the following:
- INSURANCE – Depending on the state you live in, your vehicle and other factors, average premiums range from $1,100 - $2,500 per year.
- INITIAL REPAIRS – If you’re buying a used car, plan to set aside at least $100 for any incidental repairs, like a tear in the seat or other minor cosmetic repairs.
- FUEL – It depends on your driving habits, fuel efficiency and the price of gas, but fuel averages $6,000-$9,000 per year.
- ROUTINE MAINTENANCE – About four times per year (every 5,000 miles), a $20-$40 or more oil change will be in order, but this is a small cost as long as it’s in good shape.
Having a clear picture of the costs of purchasing and owning a new vehicle will better equip you to choose the right one for your needs, negotiate a fair price and determine the best way to pay for the purchase. To help navigate a loan for your car, you can apply online, at any IHMVCU branch or at one of more than 70 preferred dealerships.
PRO TIP: When was the last time you compared auto insurance rates? If getting the best deal for your money is important to you, it’s worth getting a free quote from IHMVCU Insurance Services.