Not even Google Maps can Navigate The Worst Car Market In History… but maybe we can?
The Jetsons may be disappointed to see that our cars can't fly yet… but car prices sure have soared! (by nearly 40% since March 2020.) The main issue is a global computer chip shortage. Prices are still rising at a rate of $100 to $200 per week and probably won’t return to normal until… maybe… possibly… 2025 😬 (Can we just switch to flying cars then, please?)
Here’s Five Fast Facts you need to know about the car market and what do if you really need a new ride in 2022:
- 🚗🤏Inventory Got Low, Low, Low, Low - Got new cars? No. Got used cars? Nah. Even the biggest car companies (GM, Toyota, etc.) have less than a month’s worth of new inventory in stock. Almost any new car you get from them will be something that doesn't even have it's lug nuts yet, let alone be ready for a test drive, and that car won't be in your driveway for several months after you order it.
- 🤷💸Say “Goodbye” to Free Money: Most Incentives Are Long Gone - The average new car discount in 2020 was nearly $5K...now it’s only about $2,900 in total. Solution: Here's a short list of new cars that still have relatively good incentives, but even these ones aren’t like what they used to be.
- 👨💼💰 Watch Out For Dealers Charging Above MSRP & Extra High Used Car Prices - The average price of new cars is more than $46,000 (an increase of $5,000 in just one year.) The average used car list price right now is a record $26,971 (that’s 38% above 2019 prices!) Solution: you'll need to look everywhere and scour the internet… possibly having a car shipped to you from out of state.
- 💵🧾Pay Cash If You Can: It’s Harder to Get Credit Approval For a Loan - Dealers are raising the prices of new cars and, in response, banks are valuing those cars at 110% or 120% over their actual retail value. This makes it harder to get a new auto loan with less-than-stellar credit but easier to slip into a loan that might be higher than the true value of the car Solution: pay cash (friendly loan, anyone?) or at least try to get a car loan close to the average interest rate of about 4%.
- 🚙🤔 Just Love The Car You Own or Don’t Be Too Picky - If you can keep your old beater running, then that might be best. It's usually cheaper to fix instead of replacing a car. Also, if you happen to be one of the millions who leased their car before 2020, then your car might actually be cheaper to buy out at the end of contract instead of returning since the value of the lease was set before all the prices began to skyrocket.
🔥Bottom line: You should only buy a car right now if you absolutely need to, not if you just want to. If you are thinking about buying then consider checking out some free budgeting, car payment, leasing, and insurance calculators online.
If you like our tips or have some of your own let us know by connecting with us on Social Media and be sure to share this newsletter with any friends & coworkers!
Btw, If you’ve read this far and haven’t yet signed up for the weekly Paycheckology newsletter, CLICK HERE!
