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How to buy a new car in a high-cost environment Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial decisions by providing you with interactive financial calculators and tools, publishing original and objective content. We also allow users to conduct research and analyze information without cost, so that you can make financial decisions without a doubt. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site come from companies who pay us. This compensation could affect how and where products appear on this site, including for instance, the order in which they may appear within the listing categories and other categories, unless prohibited by law for our mortgage, home equity and other home lending products. This compensation, however, does not influence the information we publish, or the reviews you read on this site. We do not include the universe of companies or financial deals that may be open to you.



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4 min read Published March 03, 2023.
Authored by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ins and outs of securely taking out loans to purchase an automobile.







Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing concise, well-studied and well-researched content that reduces complicated subjects into digestible pieces.









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The purchase of a new car comes with the added perks of personalization, the latest technology and the sought-after new car smell. But for the past few months, purchasing new cars has also brought record costs. Up 11.9 percent over this time last year, the average new car transaction price (ATP) was $48,000, reports . So, if buying a new car is planned for the future, it is wise to consider best practices before making the trip to find a dealer. Five ways to save money when purchasing an automobile when costs are expensive when it comes to any major purchase, the best way to save money is preparation. It is crucial to conduct study prior to starting looking for a vehicle, make sure you lock the financing you are able to afford and plan in line with. And with vehicle costs increasing, this could be the perfect time to think about buying a car instead of buying a new. Along with our experts, Brian Moody, executive editor at Autotrader offered his suggestions on how to save money regardless of the overall car buying climate. 1. Do your research prior to going to the dealership Online resources have transformed the process of buying a car and allow you to find out exactly what dealerships have available before you visit the dealer. This is particularly important when there is the fewer inventory options available. Make sure you check the availability of vehicles in your local area prior to visiting in person. Otherwise, you may be pushed to purchase a vehicle that you've not conducted enough research on, Moody suggests "doing the bulk of research online prior to visiting the dealership in person." Pay close attention to any additional services or discounts dealers may be offering. Two dealerships may have the same car, but one may provide better benefits, such as discounted maintenance, or free automobile accessories, Moody explains. 2. You can apply for loan preapproval. This is an important step when buying a new car. It secures your anticipated monthly costs with a possible lender before buying the vehicle. You can then look around with a clear idea of what you'll be spending. Be sure to take it in the same way you approach vehicle shopping -- compare lenders and don't settle on the first choice you are presented with. As Moody says, the cost of loans is high. make loan preapproval all the more essential to saving money. Moody suggests preapproval at your local bank or credit union. 3. Keep your budget in check the cost of a vehicle reaching $50,000, you should consider your budget as a guiding light when car shopping. Although it's true that no matter the circumstances, it's best to stay within your budget, but with costs that high, there's not much to play with. To figure out how much you're able to spend you can afford, use an application to calculate the monthly cost of financing. And don't forget to factor into vehicle expenses, like and . 4. Consider leasing for the short term If you have your sights set on a particular car you can't find on the lot of the dealer, it could be a viable option to still get behind the steering wheel. "While leasing long term costs more but leasing for a short term can help a buyer find the vehicle they are looking for at a cost that is affordable," Moody says. By the time the lease expires the market will likely be different, and you may be able to buy a brand new vehicle. 5. Buy a used vehicle If you have some flexibility and are willing to spend money on a vehicle instead of purchasing a brand new one could be an excellent alternative. Not only will it guarantee that you will be able to take a drive in a car, but it will also result in savings. "Those seeking a good bargain should check out second-hand automobiles," Moody says. With the high demand for cars and a lack of supply, the cost of new cars will remain expensive. The present state of the market for cars price of cars is dependent on a variety of things, such as inventory available as well as supply chain issues and . These all affect the cost which you will pay in the dealership. But Moody says that the biggest impact currently is due to demand versus supply. "There are just about one million brand new cars in dealerships across America." Moody says. "The used cars on the market are nearly double. That low supply of new cars coupled with the high demand is pushing prices to rise." To top this, moves made by the make borrowing money to purchase a new car costly too. Fourth quarter 2022 witnessed motorists paying 4 percent more to finance their vehicles, according to . In the 4th quarter in 2021,, people who borrowed auto loans have financed an average of $39,834 -as opposed to the typical 41,000 that owners of cars are financing in 2022. With the combination of high interest rates and expensive automobiles, you could be expected to pay more for an expensive new car. What happens when prices for vehicles return to normal? The issue of prices for vehicles returning to normal is a slightly more complicated issue. However, according to Moody, new inventory should begin to normalize by the spring 2023. "There are many new models in the pipeline and certain supply chain issues will be solved by then," Moody says. Until then, you'll need to be ready to conduct more research than you normally would and may end up with less than the car you've always wanted. Even though there's a limited inventory doesn't mean you can't leave the lot feeling satisfied. The point is that when you're able to hold off on purchasing a new car, it might be worth the cost of saving. If you're like many Americans, waiting may have to be a last resort. Instead enter car buying with some more study and be prepared to pay a bit more even if you leave with a good deal. Learn more


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Writen by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers to navigate the details of using loans to buy a car.



The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping their readers to control their finances by providing precise, well-studied information that break down complex topics into manageable bites.






Auto loans editor




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