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One of the best weekend car shopping trends is unexploded ordnance these days.
Memorial Day sales are generally non-existent in the manufacturing challenges of the automotive industry due to continued supply chain problems.
Ivan Drury, Senior Manager of Insights at Edmonds, said: “It’s getting harder and harder for people to get a new car with the features they want at the price they’re willing to pay.”
JD Power and LMC Automotive jointly predict that new car payments will exceed $ 45,200, up 18.7% from a year ago. Buyers pay an average of about $ 700 higher than the sticker price, Drury said.
At the same time, JD Power / LMC predicts that the average incentives offered by dealers have fallen to a record low of $ 1,034, compared to $ 2,996 a year ago. Generally speaking, modern dealers don’t have to offer much in the way of incentives to sell cars.
In fact, inventory declines slowed sales by 23.8% year-on-year, but average dealer profit per vehicle increased by $ 5,046 from $ 2,733 in the previous year.
“The rise in profit levels per unit is more than offsetting the decline in sales,” said Thomas King, president of JD Power’s data and analytics division.
Meanwhile, due to limited inventory of new cars, more and more buyers are going to lots of used cars instead, Drury said.
“Many new cars you are looking at [dealer] Websites labeled “coming soon” or “in transit” are already on sale, “Druley said. “”
Of the buyers who trade in, 45% are used cars, compared to 35% a year ago, Drury said.
Of course, there is little sense of security in the used car market. Average prices for the last 12 months have risen by 22.7%, according to the latest data from the Bureau of Labor Statistics. According to an Edmonds survey, the average transaction value is $ 29,948.
However, this also means that the trade-in price is high.
“Get multiple quotes for your own used car,” Drury said. “Take advantage of it.”
Another thing to consider is the cost of financing. The average payment for new car loans is on the rise. According to Edmans, it reached 4.7% in April, up from 4.5% in March and 4.1% in December. The Federal Reserve is expected to continue raising key interest rates that affect consumer loans, and car shoppers may encounter higher interest rates in the coming months.
However, depending on the car, a qualified buyer may be able to get a decent price.
“You can still get zero or maybe 1.9% funding,” Drury said.
The average rate of used cars is 8%. but, For certified used cars — Usually passed rigorous inspection and comes with an extended warranty — special loan transactions may be found.
“It could be 1.9% or 2.9%, or even cash back,” Drury said.
And while those used cars may cost more, you can pay higher interest rates with an uncertified version of the loan.
“Even if you save money on a prepaid car with an uncertified used car, you may end up paying more overall,” Drury said.