If you’re in the market for a new-to-you vehicle, you’re likely prepared to experience sticker shock. It’s no secret that prices on new and used cars have soared since the beginning of 2020, and experts aren’t expecting them to fall anytime soon.
In addition, supply is low, and finding your dream car can be challenging – or impossible. Here’s what you need to know about the state of the market, as well as the pros and cons of buying a car in 2022.
The state of the market
Prices on new and used cars are at all-time highs, thanks to the trickle-down effects of the pandemic.
During the months-long lockdown, production of new vehicles and car parts halted. At the same time, the demand for new cars increased exponentially as many drivers moved from cities to suburbs. In addition, lots of consumers shunned public transportation out of safety concerns. When production resumed, manufacturers were unable to maintain their pre-pandemic output, let alone meet the increased demand, thanks in part to a shortage of car parts and an ongoing lack of labor.
The used-car market has been hit most by the pandemic. First, the prohibitive prices and short supply of new cars have pushed more consumers to shop for used cars instead of new vehicles. Supply is low, as car rental services, which generally sell their cars to dealers, experienced a severe decline in business for a full quarter and held onto their used cars for longer. The unbalanced supply and demand have driven the prices of used cars up to an average of $41,200, according to the car-buying app CoPilot.
Though production of new cars has since picked up and the used car market has recovered a bit, it’ll be a long time before the market completely stabilizes and prices drop.
Pros of buying a car now
Purchasing a car in 2022 won’t come cheap, but there are several advantages to buying a car now:
Cons of buying a car now
If you decide to go ahead and purchase a new or used car this year, anticipate these disadvantages:
If you’re looking to take out an auto loan to cover your car purchase, consider one through Ideal CU. The most recent data shows that auto loans at credit unions are a full two points lower, on average than auto loans through banks. Car prices may be soaring, but credit unions continue to deliver lower rates and quality service you can really bank on.
The auto loan market has been hit hard by the coronavirus pandemic. Follow the tips outlined here to help you decide whether it makes sense for you to purchase a car in 2022.