Although it's been nearly two years since a microchip shortage turned the auto industry into a market defined by scant choices, high prices and long waits, not much has changed despite the fact that the rest of the economy has mostly moved on.
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Many drivers simply can't put off buying a new car any longer -- but it's still a jungle out there.
"Today's car buyers face a number of challenges, including high inflation, rising interest rates, low dealership inventory, and few incentives," said Ian Lang, senior car advice editor at Bumper.com.
With prices high, choices few, and money getting more expensive to borrow, what do buyers need to know before they head to the dealership? GOBankingRates asked the experts.
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You Can Save Time and Money by Pre-Ordering
Lang advises purchasing your vehicle from the manufacturer to avoid markups and dealer add-ons.
"You will get exactly the color and options you desire, provided that you are willing to wait roughly six to eight weeks," he said. "Ordering a vehicle allows the dealership to save on lot fees and insurance for vehicles parked on- or off-site, which it can then pass on to the consumer. The easiest way to order a vehicle is to go to an automaker's website and build the vehicle configuration you desire, and then send this information to your preferred dealership."
According to Lang, it's common for dealerships to feel extra pressure to sell cars at the end of the month or year -- and that's exactly when you should pounce.
"The dealership may have a sales goal to meet by the end of the month, in which case it could lower its price," said Lang. "Dealerships may also set annual quotas that lead to lower prices at the end of the year."
Lang also advised waiting until just after the new model is released to look for deals on the previous model year.
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Put the Power in Your Hands by Securing Outside Financing
It's more important than ever not to paint yourself into a corner where dealer financing is your only option. Instead, give yourself the leverage of a cash buyer by getting pre-approved.
"If the dealer can beat your lender's pre-approved interest rate, having the loan in hand gives you an excellent negotiating position," said Lang. "Financing is a big part of how dealers make money, so they're incentivized to do what it takes for you to finance with them -- including lowering the price of the car, in some cases."
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Your Trade-In Is a Gold Mine
The reason that prices are so high and inventory is so low in both the new and used markets is simple: too much demand for not enough supply, which puts you in the driver's seat come trade-in time.
"Your existing vehicle is as valuable as it's ever been since you purchased it," said Lang. "While it's true that you can usually get more money by selling a car privately, low inventory and high demand mean dealers are willing to pay a premium for your trade-in. That can significantly reduce the cost burden of a new car."
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Buying Used? Go for Luxury (Sort of)
Robert Walden, the founder of VehicleFreak, recently bought a 2011 Yaris with 12,000 miles from a Porsche dealership for $7,500 -- it's a trick of the trade he recommends to everyone.
"They just wanted to get it off the lot because they have Porsches to sell," Walden said. "If you're looking for a good deal on a car, call every luxury dealership in your area and ask them, 'What's the least expensive car you have in your inventory?' They usually want to move these cars as fast as possible, so you'll get a much better deal than if you bought the same car at a non-luxury dealership."
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Treat Your Mechanic as a Purchase Partner
If you have a trusted mechanic, that's an opinion worth paying for if you're buying used.
"Taking the car to a mechanic not associated with the dealership gives a fresh set of eyes on the vehicle to see if there are any issues to be aware of that may give you more leverage in negotiations," said Nicole Miskelley, manager of PMR, an auto repair and towing company in Marion, Illinois. "Not only that, these mechanics can tell you other things about the potential future of the vehicle. Mechanics see a lot of different cars in and out, and can tell you what common issues they see with different makes and models that you should be aware of."
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Know Before You Go
According to Jonathan Ganther, co-founder and COO of Brakes To Go, getting a good price is only half the battle. The other half is making sure you get the car that balances your wants and needs -- not those of the dealership -- by conducting thorough research on a site like Autotrader or Cars.com before you talk to a salesperson.
"These sites will allow you to conduct a detailed search of the vehicles in your area and gauge their market value," said Ganther. "To find the best match, start with a general search to get a feel for what's available, and gradually narrow it down. Important filters to use on these sites include year, price, safety rating, body style, etc. By getting a good understanding of what's on the market, you'll be able to negotiate price more effectively with the dealership."
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Consider the Cost of Insurance
When crunching the numbers to determine whether you can afford the car you have your eye on, make sure to factor in the cost of your premiums.
"Without knowing the impact of insurance on your monthly payment can make you regret your purchase," said Arnold Chapman, founder and CEO of the online auto industry magazine ELDFocus.com. "Take the time to check the different insurance rates that come with the car you're looking to buy."
