According to J.P. Morgan Research, the average price of a new car in the United States increased by 4.2% from January 2022 to January 2023, which means that U.S. consumers forked out an average of $46,437.
Increases in the cost of manufacturing new automobiles have led to price increases. Naturally, consumers looking for cheaper alternatives turn to purchasing pre-owned cars. As a result, the average price of a secondhand vehicle is currently almost 30% higher than before the pandemic.
What To Expect
Vehicle prices are projected to rise and have already done so. Copilot Price Pulse shows that used car prices began to rise again in late February and early March 2023, driven by high employment and consumer confidence, according to government statistics and data from the University of Michigan, That leads to increased sales volume despite a continued supply shortage.
Couple that with the fact that this is tax refund season, already an unusually busy time on car lots as people spend their refunds. This also drives up prices.
According to Manheim, dealers are having to pay more at wholesale auctions to get their hands on cars to sell, and they pass these higher prices on to consumers. JP Morgan expects that used car costs will drop by about 10% in 2023 while new car prices will drop by 2.5% to 5%.
If you need one, you might want to consider buying a car sooner rather than later. “But if you can wait, you are probably better off doing so,” says Robert Tomkinson, VP of Marketing of Copilot Search.
If you choose to wait, Tomkinson advises holding out until after May, when we can expect that supply and demand will realign and used car prices will start to drop again. They further note that prices have a long way to fall. Either way, getting a used car might be a good option if you need to replace your vehicle.
However, compared to a brand-new car, buying a pre-owned car can be a little tricky. Avoid the following mistakes to get a good deal and value for your dollars on a used car.
7 Pitfalls To Avoid
1. Not Doing a Proper Test Drive
Most people understand that a test drive is crucial, but how well you do the test drive is equally important. Being gentle with the used car on a test drive is the wrong way to do it. While the car you are interested in may not be the fastest in the world, according to Todd Bialaszewski, CEO of Junk Car Medics, you should absolutely floor it on a test drive.
Drive on city streets AND highways. They note that only at high speeds can you really know about the car’s performance, safety, and secret leaks while putting those brakes to the test.
2. Overpaying Loans
Tomkinson admonishes buyers not to overpay for their loans. They note that rates have gone up, which is true. But dealers also add 1-2% to what the bank charges them. This can make an affordable car a much more expensive car.
To avoid this, they suggest getting your quote from your bank or Credit Union, Getting pre-approved, and using that financing if the dealer can’t beat it. “And remember,” they say, “a low monthly payment stretched over more years is still more money out of your pocket, so think carefully.”
3. Skipping Research
Not researching the year/make/model is another costly mistake you would be making. Bialaszewski says that each car year, make, and model has its problem areas – it’s unavoidable. As such, you must know what they are and discover if the seller has taken steps to resolve those issues. You can check the maintenance records to get the insights you need.
Research should also include checking the vehicle history with a service like CarFax. The purchase of a used vehicle should always begin with the acquisition of a vehicle history report. It will tell you about any prior accidents, repairs, vehicle owners, and other relevant information.
Ignoring this step could result in expensive repairs if the car has a history of damage hidden from view.
Also, check to discover any active recalls on the used automobile you are considering purchasing before purchasing. The website of the automobile manufacturer should have this kind of information. When you buy a used car with an outstanding recall, find out if the current owner has resolved the problem.
4. Overlooking Rust
For all you know, the car’s structure might be faulty because of unrepaired rust. Treating rust as insignificant when inspecting can pose a danger. Rust is widely regarded as the cancer of vehicles. Bialaszewski notes that no matter how small the rust spots are if you see rust, it’s likely to be everywhere.
“If you want to avoid an expensive and difficult repair, keep an eye out for any sign of rust,” they warn. Fenders, doors, floorboards, and rocker panels are some places you should check for rust before purchasing.
5. Falling in Love With One Car
Dealers can tell when buyers are blown away by a product, which puts you at a disadvantage. “You won’t be able to negotiate so well,” says Tomkinson. “Have at least two cars you are happy with, especially at other dealers, so you can walk away.
“CoPilot will provide comps to compare, just like you would with house buying. Maybe take a buddy when you go to keep you honest.”
6. Forgetting To Consider Maintenance Cost
Before purchasing a pre-owned vehicle, it is important to investigate the maintenance costs associated with that specific make and model. Older vehicles are more expensive to maintain and have more frequent repair needs, such as faulty air conditioners. Always factor in the cost of upkeep while making a purchase decision.
7. Being Blindsided by Other Costs
According to Tomkinson, you should Insist on being told the out-the-door price before you go to the dealer. Otherwise, dealers will mysteriously add hidden costs to offset any discounts you get. They explain that $100-200 of document fees are normal.
But $ 1000’s of vague market adjustment is not. So you’ll need to push back. In addition, they advise not paying for protection packages and service offers you don’t need.
If you want a warranty, it’s wise to get some quotes on that before you go too. Otherwise, the dealer can easily add $1500-$2500 in the markup for an extended warranty. Tomkinson recommends checking Olive, Toco, or CoPilot for extended warranty quotes, and be sure to compare apples to apples for deductibles, years, and mileage.
Avoid These Mistakes
Purchasing a pre-owned car can be a smart way to save money; however, it's important to avoid errors and oversights that could ultimately result in additional expenses. A thorough inspection of the car, reviewing its vehicle history report, and doing proper research can ensure that your purchase is worth it.
This article was produced and syndicated by Wealth of Geeks.
source https://wealthofgeeks.com/buying-a-used-car/
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