Looking to buy a car? A recent report reveals that as inventory begins to recover, another challenge is emerging, making it difficult for many buyers to get their hands on a shiny new ride.
In recent years, car buyers have been dealing with low car inventory, but that situation seems to be starting to change.
Ivan Drury, Director of Insights at Edmunds.com explains: “We’re starting to see cars on the lot a bit longer. Now, you don’t have to wait until like the weekend or you can wait until the end of the month. to buy, but it’s one of those things where we’re starting to see some signs of normalcy.”
A report from Edmunds.com shows that in the first three months of 2023, car dealers had more new vehicles in stock compared to the same period a year earlier. However, they took longer to sell, averaging 34 days, 10 days longer than a year ago.
Drury adds, “We’re definitely nowhere near the pre-pandemic levels of 2019, 2018, but we’re starting to see glimmers of hope.”
Drury says people in South Florida tend to buy used cars over new. As a result, used vehicles sell faster, typically in 32 days, which is faster than the national average of 40 days.
Higher demand can also lead to higher prices. “If you’re looking at a used car, be prepared to act fast because they move off dealer lots very quickly,” says Drury.
It warns buyers to be aware of high interest rates, which drive up costs for consumers. “Almost everyone is paying higher interest rates, whether it’s new or used compared to a year ago,” Drury notes.
By early 2023, new car payments hit an all-time high, averaging $730 per month, according to Edmunds.com.
Nearly 17% of consumers ended up accepting a monthly bill of $1,000 or more, and down payments also increased to an average of $6,956.
Drury advises: “If you’re looking at a new car, luckily there are still some incentives. You could be looking at something like a 0.9 or 1.9% APR. The thing is, look at the length of the term they’re talking about. Sometimes these low paper deals where it’s essentially free money. However, you have to pay it 36 or 48 months, that can be a very high payment, something like $1100, $1200 a month.”
The experts at Edmunds.com note that the days of finding a new vehicle for $20,000 are almost over, and the $25,000 price tag could be next.
Now, 94 percent of large SUVs sold cost more than $60,000, a huge jump from 54 percent just five years ago.
As a result, people are likely to turn to used vehicles for cheaper options.
