(WHTM) — We all know that 2022 was a tough year if you were looking to buy a car. New cars were scarce and old cars were expensive. But how will things shake out in 2023?
“I know a lot of people were searching in 2022, they come to find out that the cars they thought were on a dealer’s lot, they weren’t or were in transit. You get to the lot, there’s nothing there… you see the employees’ cars and not the cars for sale,” said Edmund’s Car Expert, Ivan Drury.
Drury said that things are slowly getting better, but don’t expect to find everything you want right away.
“In a normal year we’d have 4 million cars on dealer’s lots nationwide… we’re still below 2 million today on a regular basis, while we say there will be an increase. it’s better than the bottoming out of 1 million we saw when it was really bad. But the same time getting back up to 4 million — highly unlikely,” said Drury.
Drury broke down car shopping to the good, the bad, and the ugly.
First, he focused on the good, which is the prices. Last year, people were paying above the asking price for cars. However, this year you should be able to find deals again.
With inflation driving up the costs of everything else, you need to be sure you’re ready to buy a new car.
“You really have to determine is this car affordable and is this car affordable six months from now, one year from now… look at that monthly payment, look at all your budget and assume your monthly payment for your car stays the same. But other things in life might get more expensive,” said Drury.
Up next, Drury mentioned the bad part of buying a car in the current market.
Leasing can be bad because so many people were leasing last year that dealers had no reason to slash the prices.
In 2023, that is expected to stay the same.
“Leasing is heavily based on the idea that there’s a lot of vehicles out there and they need to get rid of them cheap and the resale value’s going to stay very high, so the automaker doesn’t have to spend a lot of money when they get that thing back,” said Drury.
If you make the decision to lease, be sure that you check the paperwork for specific restrictions.
Lastly, Drury discussed the ugly, interest rates.
“We’ve seen interest rates go up just a few percentage points, at first it might not sound like a lot but when you do the math you talk about how much the interest costs you over the life of the loan for a new car at a 6.6% approximately, 40K finance…$8,000 in simply finance charges alone.,” stated Drury,
More hikes are expected in 2023. To help with the price hikes, you can find ways to pay your car loan off faster, although you may have to compromise on the car you buy in order to afford doing that.
“The average loan length is 7 years, maybe 6 years, but if you can actually wrap your mind around paying that car off in half the time you initially thought you could save thousands,” said Drury.
We asked Drury if he believes 2023 will be the best year yet for buying a car. “2023 is better than 2022, but not the best year we’re going to have. I always say wait if you can.”
Most car shoppers couldn’t find what they were look for last year, or the prices are way too high. People stopped trying to look for cars. This is also known as “deferred demand.”
It will take a little while until inventory can catch back up again. The demand for used cars is very high, so the best advice is to be patient.
If you are stuck in a position where you can’t wait, do as much research as possible. You’ll want to make sure that you look at all the costs and try to time your purchase so you can maximize the value of your trade-in.