You may want to rethink your plans.
Most important points:
- Car prices are currently high across the board.
- If you can wait to buy a car, you may want to go down that road.
For some people, owning a car is a luxury. But for others it is a necessity. For example, if you need a vehicle to get to work, that’s an unavoidable expense.
That said, there is a difference between needing a functional vehicle and a nicer one. And if your car currently runs fine, then you should think twice about upgrading, according to financial expert Suze Orman.
It’s a bad time to buy a car
on a recent podcast, Orman advised consumers not to buy a car now if possible. The reason? Prices are so high, she says, that consumers tend to pay a lot more for a new car.
In addition, lending rates are higher in the wake of the Federal Reserve’s rate hikes. So all things considered, consumers buying and financing a car may be looking at their budget, especially if we also factor in the cost of auto insurance.
How bad have car prices gotten? In May, the average transaction price for new vehicles was $47,148, according to new data from Kelley Blue Book.
Last month, car prices rose 1%, or $472, compared to the previous month. They also increased by 13.5%, or $5,613 on average, compared to May 2021.
In fact, the average price paid for a new car last month was the second highest ever. The only month in which consumers paid a higher average price for a new vehicle was December 2021, when the average transaction price for a new vehicle was $47,202.
Of course, higher car prices also mean a higher cost of ownership when we factor in the cost of financing a vehicle. Last month, the average monthly car payment in the US reached $712, according to market research firm Cox Automotive. That is a record high.
Do your best to wait
If your current vehicle really isn’t safe or reliable to drive and you live somewhere where having a car is a must then you may have no choice but to buy a car at a higher price and be stuck with a higher one. car loan payment. But if you have the option to wait, Orman strongly recommends that you do.
That said, just because you need to replace your current car doesn’t mean you have to pay for a new model. First, you can always go the certified used car route, which is probably a lot cheaper than buying a new car. And if that doesn’t work for you, for example, you don’t feel comfortable driving a previously owned vehicle and you want the warranties that come with purchasing a new vehicle, be judicious about its features what you pay in a new car. car.
You might like the idea of heated seats and a state-of-the-art entertainment system. But if that adds $5,000 to the cost of your car, you may not want to upgrade that much.
Today, driving is a much more expensive prospect thanks to higher gas prices. The last thing you need right now is a budget car loan payment hanging over your head.
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