Financial tips to know before car shopping in 2022

Looking to purchase a car this year? Read this first

We checked in with financial counselor Brenda Pollock for some tips before heading to the car dealership this year.

PORTLAND, Maine — If you’re looking to purchase a new or used car in 2022, be prepared for sticker shock. Vehicles are being sold for thousands of dollars over asking price, and that trend is not expected to change until next year, according to financial counselor Brenda Pollock.

Pollock, who works with Evergreen Credit Union, has a few tips for anyone who wants to upgrade their ride.

People are actually paying more than sticker price on new vehicles? Is that wise?

Answer: No. Not wise. If you can hold off on picking up a new car for another year, we can hopefully see a new vehicle supply bouncing back to pre-pandemic figures, but probably not until 2023.  

What about the used car market? Is it a good time to pick up a used vehicle instead of looking for that brand new car?

Answer: The used car prices increased nearly 40 percent in 2021, and they continue to rise in 2022. The fact is, this upsurge is not only observed in some specific car models. Instead, all vehicles, even the used ones, including midsize and compact cars to luxury used cars, have faced an incredible price appreciation over the past few months.

At the onset of the pandemic, it seemed like auto manufacturing came to a screeching halt and would be slow to rebound. Is that the case? 

Answer: In April 2020, the U.S. saw auto production drop 99 percent from February 2020. By the end of that summer, the industry did begin to rebound, but that was short-lived. Component shortages and delays caused by a disrupted global supply chain and monthly U.S. auto production took another stop back. In total, U.S. car production fell 23 percent in 2020, and it’s currently on pace to fall another 8 percent this year.

What about those of us who are shopping for a new or newer vehicle? What are some things we should consider before buying?

Do your research and be flexible.

  • Narrow down your list of “must-haves.” 
  • Be willing to compromise on the trim level and features, and maybe the manufacturer and model as well. 
  • Even if you always buy used, consider new. There may not be that big of a price difference. 
  • Beware that certain hot models are commanding huge premiums. Some Ford Broncos are selling for $40,000 over sticker price, so it’s best to be open to alternatives.
  • Figure out your dream car, then have a backup and another backup.
  • Definitely be flexible on things like color.

Be prepared to act quickly.

  • It’s basically impossible to haggle your way to a sweet deal. If you want it, buy it. 
  • Buying a car is basically a luxury purchase nowadays. Just remember to stay within your budget 10 percent to 15 percent of your income. 
  • It’s wise to expand your search to sellers far away from home, too. You may have an easier time finding the vehicle you’re looking for. 

Negotiate at the margins.

  • While dealerships aren’t likely to budge on price, you might have luck asking for bonus extended warranty coverage or additional free oil changes.
  • If you are financing through the dealer, be sure to check with your bank or credit union for better rates and terms. If you find a better deal, refinance.

What if you’re trading in a vehicle? Any tips we should know before we head off to the dealership?

Answer: “Remember, there is a supply crunch, so do your homework, and if you have a car to trade in, you are in possession of a highly in-demand asset that’s probably worth more than you think,” Pollock said. “Make the most of it. If you have a Ford, take it to a Ford dealership and see what they’d pay to buy it outright. You could wind up with hundreds or even thousands of dollars more by taking that extra step.”

RELATED: Everything you need to know ahead of filing your taxes this year

RELATED: Want to declutter and make money? We’ve got some tips

https://www.youtube.com/watch?v=videoseries