The New Year is a Great Time to Buy a New Set of Wheels
The new year is a great time to save some money on a new set of wheels.
Consumers can benefit from the combination of several market situations, said Mike Losneck, CEO of Eaton Family Credit Union. “Dealers typically have year-end sales events to sell off remaining vehicles, and if you wait until the end of the month, automakers and dealers are looking to meet monthly sales targets so they’re more aggressively discounting vehicles.”
But according to Automotive News, more Americans are likely to turn toward a used, rather than new, car for their next purchase. Escalating vehicle prices and growing auto loan debt could be responsible for the growth of used car sales, Losneck said.
Kelley Blue Book reported an average new car cost $37,285 in June, up 3.1 percent from the same time the previous year. In comparison, Edmunds.com reported the average price for a used car during the first quarter was $20,200 – up 2.5 percent over the previous year.
We’ve seen costs steadily rise over the past five years, Losneck said. During this period, new-vehicle prices rose by more than $4,000 and used-car prices, while the growth was slower, they also grew $2,000.
Losneck explained, “in 2018, the price gap between a new car versus a 3-year-old used vehicle was 62 percent, meaning a customer could save an average of nearly $14,000 by purchasing used instead of new.”
Financing the purchase of a vehicle also has seen costs rise.
According to research by Lendingtree, Americans owed more than $1.16 trillion in auto loans as of March 2019, an increase of $47.7 billion over the same period in 2018.
Fortunately, Ohio credit unions offer lower average loan rates on both new and used car loans, Losneck said.
The Credit Union National Association (CUNA) estimates financing a new automobile priced at $25,000 for 60 months at an Ohio credit union will save Members an average of $109 per year in interest expense compared to what they’d pay at other financial institutions in the state.
In addition to saving money by financing a vehicle purchase at your nearest credit union, CUNA also offers these money-savings tips for buying your next vehicle:
- Calculate which car buying option is best for you. Prepare ahead of your purchase by calculating and weighing your car buying options. Will you buy new or used? Will you lease? Each individual’s scenario is different so you should choose the option to best fit your specific transportation, mileage and budget needs.
- Don’t buy more car than you want or need. If you can’t afford and/or don’t need the expensive equipment or options many cars have, then don’t pay the extra dollars. Just because a particular car – without all the bells and whistles – is not on the lot you’re shopping doesn’t mean the dealer can’t order it for you.
- Negotiate a lower price — or find a ready-made deal. Go into your car-buying experience knowing the price you want to pay by using a car pricing website such as Kelley Blue Book or Edmunds. They can show you Manufacturer Suggested Retail Price (MSRP) sticker prices, dealer invoice prices and average sale prices so you know the true value of the vehicle you’re hunting.
- Shop all your options. Car shopping has never been an easier process than it is now. With online inventories, car buying services and more – dealers are no longer your only option. Make sure to shop different vendors, compare the cars you’re shopping and compare associated pricing.
- Decide what to do with your current vehicle. Selling your car to a private party can be cost-effective but trading in your current car at the dealer might be easier. If you trade-in your car, make sure you know its current value and then evaluate the trade-in offer against a private sale to see which option would be the most beneficial to your situation.
- Don’t forget the coupons! Many car manufacturers offer rebates and cashback incentive programs on new or used cars. Others offer additional specials such as student and military discounts. Research these incentive programs online at the manufacturer and dealership websites to ensure you save every penny you can.
- Get pre-approved. Apply for auto financing from your credit union before heading to a dealer. You’ll know exactly how much car you can afford, which can give you buying power, and prevent you from over-spending.
Dave Godek, MBA
Business Development Manager
Eaton Family Credit Union