What's Stopping You From Buying That Car Right Now? Jack Gillis is.
Who's Jack? 10 Tips if You Must Buy During This Seller’s Market
"If you don’t need to replace your car right now, you should wait," says the CFA’s Jack Gillis. "The problem is that vehicle inventories are way down, which means it’s a sellers’ market. Limited supply is a price-conscious buyer’s biggest enemy."
By Roy Nakano
Mon, Jun 7, 2021 12:24 PM PST
Don’t expect sweeping discounts on the red-hot Mustang Mach-E. The car beat out Tesla sales in the small but influential EV market in Norway for the month of May. (Featured image is a Ford Motor Company image).
It’s the Great Re-Opening!
So, your household is fully vaccinated. COVID rates are dropping to the lowest levels in a year. And while many have faced financial devastation during the pandemic, you’ve had the good fortune of retaining your job through telework. As a result, you haven’t been driving much, you’ve been cooking your own meals, and watching endless episodes of television shows instead of going out. You’ve accrued a remarkably high amount of cash.
Now that the country appears to be turning the corner on the pandemic, you’re dying to spend that accumulated cash on the consumer’s biggest symbol of freedom and mobility—the car.
It turns out you’re not the only one. While racecar fans flocked to the Indianapolis 500 during Memorial Day weekend, an even larger segment of the American population are flocking to car dealerships and surfing the Internet for information on their next set of wheels.
So, What’s To Stop You From Buying That Car?
"If you don’t need to replace your car right now, you should wait," says the CFA’s Jack Gillis. "The problem is that vehicle inventories are way down which means it’s a sellers’ market. Limited supply is a price-conscious buyer’s biggest enemy."
So, who are these killjoys, and why are they saying these things? The CFA is the Consumer Federation of America, and Jack Gillis is its executive director. Sine 1968, the federation of 250-plus nonprofit consumer and cooperative groups has been trying to advance the consumer interest through research, advocacy, and education. The post-vaccination/near post-pandemic shopping frenzy is not the only reason the CFA cites for delaying your purchase. The widely reported chip shortage - which has impacted inventories as much as 30 percent - has further diminished supplies in this period of high demand.
"The rule of thumb that nobody pays ‘sticker price’ for a new car has fallen by the wayside as dealers stick to the manufacturers suggest retail price (MSRP) on the vehicle label," said Gillis. "In fact, for some particularly popular vehicles in short supply, dealers are charging prices above sticker price."
Fortunately, the CFA recognizes there are consumers who don’t have the luxury to hold off on a new car purchase, and need to replace their vehicle right now. For them, the CFA put together ten tips on saving in a seller’s car market:
10 Tips on Saving in a Seller’s Car Market
If you must buy a new car right now - here's how to make sure you get the best deal:
1. Shop carefully.
You can find some deals and incentives, especially on the less popular vehicles. Everybody is looking for SUVs - so if a sedan meets your needs, you can find some good prices.
2. Shop around online
As car buyers become more comfortable with online vehicle purchases, more and more dealers are offering internet specials. Shop carefully and read the fine print, but these offers can be good negotiating tools when you’re in the showroom.
3. Widen your search area.
If buying from a dealer 70-100 miles away will save you money, you should definitely consider it. You can still take your car to your local dealer for service and warranty work, and you'd drive much further than that for many other things - so why not a major (car) purchase?
4. Avoid the upgrades.
Unfortunately, most manufacturers don’t let you pick and choose your options, you must buy them in packages. Skipping the fancy packages on a particular model can save you 10-20 percent.
5. Skip the extras.
Dealer add-ons are budget busters. Floor mats, cargo containers, luggage racks and fabric treatments, if needed, can always be purchased later and at far less cost.
6. Decline the extended warranty.
Today’s new car warranties are very good and extended service contracts (they’re not really warranties) are not only expensive, but if they actually paid off for most people, they wouldn’t be such big profit centers. Instead, plunk those service contract dollars in a special savings account to draw on if you need post-warranty repairs. Most likely, you can use this account to build up your down payment for your next vehicle.
7. Beware of using longer loans to reduce your monthly payments.
While those smaller payments may sound attractive, you will pay significantly more in overall interest costs, and you’ll probably be “upside down” for the first year or two. That means if the car is totaled or you must sell it, you’ll have to make up the difference between your insurance payment (or sale) and the balance on your loan.
8. Shop around for financing.
Interest charges are one of the most expensive aspects of car ownership. Knocking a point off the interest rate by shopping around will save you hundreds with lower monthly payments. Check with your credit union or bank to see what they are offering, so you’ll know if the dealer’s offer is a good one. Also - Warning! - very few people qualify for the often-advertised 0 percent interest rates, so don’t get your hopes up.
9. Check out "No Haggle"-dealers.
No haggle or posted-price dealerships are becoming more prevalent. These dealerships will post a non-negotiable price on the vehicle, saving you the anxiety and pressure of trying to match wits with a seasoned, professional seller.
10. Consider selling your used car yourself.
The used car market is hot, and you can usually sell it for more than the dealer will pay you on a trade-in. Those extra dollars can help make up for the higher prices you’ll see in the new car showroom. Also, check out the national chains that offer to buy your vehicle with a price that’s good for seven days.
The Consumer Federation of America an association of more than 250 nonprofit consumer and cooperative groups that was founded in 1968 to advance the consumer interest through research, advocacy, and education. You can read more about the CFA here.
About The Author
Roy Nakano gave birth to LACar in the late '90s, having previously delivered LA Audio File back in the '80s. Aside from the occasional review, Roy likes to stray off the beaten automotive path: "Six Degrees of Reparations" reflected on the regretful ethical paths taken by car companies throughout history. "Traveling Through the Past and Present of the Green Book" looked at businesses that took a stand against racism and the man that wrote the book on where to find them. "Best Cars to Drive in Rush Hour Traffic" was an LACar guide published in the pre-GPS era. "In Search of the First Datsun 510 Tuner" looked at one of the milestones in the origin of import tuners.