Looking to buy a car? A recent report reveals that as inventory starts to bounce back, another challenge pops up, making it harder for many buyers to get their hands on a shiny new ride.
In recent years, car buyers have grappled with low car inventory, but that situation appears to be beginning to shift.
Ivan Drury, Director of Insights at Edmunds.com, explains, "We're starting to see the cars a little bit longer on the lot. Now, you don't have to wait until like the weekend or you can wait till the end of the month kind of not to shop, but it’s one of those things where we are starting to see some signs of normalcy."
An Edmunds.com report shows that in the first three months of 2023, car dealers had more new vehicles in stock compared to the same period the previous year. However, it took them longer to sell, averaging 34 days, 10 days longer than a year ago.
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Drury adds, "We're definitely not near, you know, 2019, 2018 pre-pandemic levels normal, but we're starting to see glimmers of hope."
Drury says that people in South Florida tend to prefer buying used cars over new ones. As a result, second-hand vehicles sell faster, usually within 32 days, which is quicker than the national average of 40 days.
Higher demand can also lead to higher prices. "If you're looking at a used car, be ready to act fast because they do move very quickly off the dealers' lots," says Drury.
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He cautions buyers to watch out for high-interest rates, which are driving up costs for consumers. "Almost everybody is paying more interest rates, whether that's new or used compared to a year ago," Drury notes.
According to Edmunds.com, in early 2023, new car payments hit a record high, averaging $730 a month.
Almost 17% of consumers ended up agreeing to a $1,000 or more monthly bill, and down payments also increased to an average of $6,956.
Drury advises, "If you're looking at a new car, thankfully there's still some incentives out there. You can look for something like a 0.9 or 1.9% APR. The thing is, look at the term length that they're talking about. Sometimes these low paper deals where essentially the money is free. You have to pay it off, though, 36 or 48 months, that can be a very steep payment, something like $1100, $1200 dollars a month."
Experts at Edmunds.com point out that the days of finding a new vehicle for $20,000 are nearly over, and the $25,000 price point could be next in line.
Now, 94% of large SUVs sold cost over $60,000, a big jump from 54% just five years ago.
As a result, people are likely to turn to used vehicles for more budget-friendly options.
