Pat Shozo has been trying to buy a used car for his son who’s going to attend college in the fall. But after looking for more than three months, Shozo, who lives near Los Angeles, said he’s ready to give up.
“Everything’s so inflated,” he said. “It’s actually absurd.”
Prices for used cars have rocketed to record highs this year as supplies of new cars have been hampered by computer chip shortages.
If you’re looking for a new car now, whether it’s brand new or just a new-to-you used car, experts say it’s more important than ever to be open-minded about the exact make and model you need.
“Don’t fall in love online,” said Ivan Drury, a data analyst with Edmunds.com.
With a budget of about $15,000, Shozo said he’s been looking at 5- to 10-year old Hondas and Toyotas. Even when he has found something to consider, he said, dealers insist he pay for expensive pre-installed add-ons, like paint protection or an alarm system that make the price even higher.
“Bizarre things they have the gall to charge $4,000 or $5,000 for,” he said. “It really makes it no fun at all to buy a car.”
At least Shozo is being flexible about what he’s looking for, which is one thing experts advise.
“Right now, when there’s limited inventory, it makes it hard to just go out and find it and buy it,” said Joe Wiesenfelder, executive editor at Cars.com. “That leaves those looking for something very specific in the tightest bind.”
Here’s what you need to know about shopping for a car in today’s crazy market:
Consider leasing instead of buying
Shozo thinks he might just lease a car for himself and his wife and let his son drive one of their current cars.
That’s probably a good idea, said Drury. Luxury automakers, especially, are still offering leasing incentives, he said, making it possible to get a BMW or Mercedes for only a little more than you might pay to lease a mainstream model. And leasing could allow him to ride out the currently inflated car market.
If you’re leasing now, negotiate a strong exit
If you have a lease contract coming to an end soon, you could be in a really good position, said Wiesenfelder. A lease usually includes a pre-set price at which the lease customer can buy the car at the end of the lease term. That price is probably considerably lower than the car could actually be sold for now.
You could just buy the car at a bargain price and keep it or quickly resell it at a profit. Or you could just negotiate for your dealer to buy the car from you, said Wiesenfelder.
“Not everyone is built for this sort of transaction, playing those negotiations, but it’s doable,” he said.
Also, it will require some patience to wait for all the paperwork to go through, he said. But it can pay off for those with the perseverance.
Cash in on your current car
There is some good news for car shoppers in this current crazy market. If you have a car to sell or trade in, it’s worth way more than it would have been before.
Sean Kalist, who lives in the southeastern part of Illinois, said he recently bought a Toyota Rav4 Hybrid – not the plug-in version – after selling his 2014 Volkswagen Passat. He had bought the Passat as a used car 18 months ago, he said, and sold it for exactly what he had paid for it back then.
“So we drove it for free for a year and six months,” he said.
He also traded in a 2019 Toyota Sienna minivan, he said, which was also worth nearly the amount he’d paid for it two years ago.
So while he did have to pay nearly full sticker price for the Rav4, he said, that was offset by the benefit of having paid nearly nothing for two other vehicles. He couldn’t find one in stock at any local dealers but was able to order one through a local dealer with the features he wanted, he said.
Kalist’s claims about the money he sold his two used cars for are believable given the current market conditions for used minivans and diesel cars, said Drury in an email.
Pricing for minivans is particularly strong, he said, since there just aren’t many models to choose from. And pricing for VW’s diesel cars has bounced back, too.
“I’ve seen pricing on those much stronger than when people had thought ‘dieselgate’ would destroy the resale [value],” Drury said.
If you can afford to, wait it out
Anne Christopher, who lives in Atlanta, has been shopping for a Toyota Rav4 Prime, a plug-in hybrid version of the popular crossover SUV, since last fall.
Even before the chip shortage seriously hampered production, she was struggling to find one to buy. Toyota has mostly been shipping Rav4 Primes to states like California and New York, where demand for plug-in vehicles is greater. Christopher was even willing to travel to the Northeast to get one, but still couldn’t find one at a reasonable price, she said.
So she decided to forget about getting a new car for now, and has put a deposit on a Fisker Ocean, an electric SUV from a California-based startup that isn’t due to be in production until the fall of 2022.
In general, waiting is a really good option for those who don’t really need a car now, said Wiesenfelder. You might be tired of paying for repairs and maintenance on your current car, but it could well be less than you’ll pay for a new car – especially now.
“if you’re going to buy a brand new car and pay hundreds of dollars a month, every month, for the next two, three or four years. That’s definitely more expensive than a $1,000 a year in repairs or $2,000 a year,” he said.