With used car market still very hot, tips for auto shoppers
MINNEAPOLIS -- Whether you're shopping new or used, the car market is hot.
"Honestly, I've been trying to look everywhere I can," Michaela Spielberger said.
Spielberger has spent the last year looking for a reliable used car. Really, it's more like two years. About a year ago, shortly after she purchased her 2010 Ford Escape, it was totaled in a hit-and-run crash.
"I've been looking on Craigslist, Facebook Market Place, and reaching out to my community just to see if anyone knows anyone selling something," she said.
It's a hard search, and she says it's getting old. Dealerships, like Walser Suburu in Burnsville, say they're still seeing historically high sales numbers.
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"It's hard to predict, but I really don't see things slowing down. I mean this is our busy season," Walser Automotive Group Senior Vice President of Operations Pete Swenson said. "Volume is picking back up. So this year has been a pretty good year so far. The hardest part is sourcing vehicles. Whether that's ordering new vehicles or sourcing used ones."
While people are starting to finally pay under sticker value, prices are very different from a few years ago. New and used vehicles still differ with a small price gap.
"The pricing has come down a little bit," Edmunds Consumer Insights Analyst Joseph Yoon said. "Let's say you bought a car five, six years ago. Compared to then, used car pricing is still up over 40%."
With such a small price difference, it's causing some shoppers to opt for a new car.
"It's happening all the time," Swenson said. "Prices are very, very close."
And with high demand, those new car buyers could be waiting weeks to take their purchase home. Swenson says it all depends on the make and model.
"Some are better than others," Swenson said. "It's months in some cases."
Interest rates are also impacting buyers. According to Yoon, even the most qualified buyers are seeing a 7% interest rate and more than 11% on used. Cheap cars are now hard to come by, and monthly payments have spiked at a record high of $730 a month.
"The most difficult thing really is that the interest rates are at record levels since the great recession," Swenson said.
In this market, experts urge consumers to be active shoppers. Go to the dealer lot, look online, and do your research.
"If we don't have what they want, we'll show them what's available and how they could order the exact car that they would want," Swenson said.
Yoon suggests considering all options, finding the deals that work for you, and having alternatives.
"If a new car isn't for you, you might have to go used. And if you've never bought a used car before, ask your local mechanic to give you a pre-purchase inspection for peace of mind," Yoon said.
Lastly, Yoon says to establish and keep your budget in mind before you start the shopping process.
Spielberger is hopeful she'll find something. But with an upcoming move, she's looking at places close to public transportation, just in case.
"You'll find a way to make things work," she said. "That's kind of what I'm doing."
