There’s a bit of good news for car shoppers this summer.
According to Kelley Blue Book, a Cox Automotive company, the average transaction price of a new vehicle in July decreased by $337 from June 2023 and, compared to the start of the year, transaction prices are down 2.7% or $1,335.
With price cuts for luxury and electric vehicles, inventory improving and more incentives available, now may be a good time to explore your options.
Just don’t forget to shop around for your financing as well. According to US News, the average auto loan interest rate as of August 2023 varied from 7.72% to 23.9% based on the applicant’s credit score and whether the loan was for a refinance, new or used auto.
That’s a huge range and can have a big impact on your monthly payment.
These tips can help you negotiate the final purchase price and analyze your financing options:
• Do your research. Knowing the fair market value for the type of car you’re interested in will help you negotiate and may help you avoid paying more than a vehicle is worth. This can be especially helpful for used cars. Online resources like Kelley Blue Book at kbb.com and True Car.com are a good place to start.
• Keep your options open. If you need reliable transportation right away, you may benefit from keeping an open mind regarding the exact car that will best suit your needs. Choosing a specific new vehicle’s make, model, color and features often takes time and could increase your spending vs. a gently used, newer model with low mileage.
• Calculate the total cost. Understanding the complete picture is vital to ensure you’re getting the best deal on auto financing and that you are getting a loan you can afford. Don’t just focus on your monthly payments, consider the term or length of the loan, interest rate, any fees and the total price of the vehicle plus any add-ons like extended warranties.
• Protect your investment. You also may want to consider Guaranteed Asset Protection or GAP insurance, which will cover the gap if your insurance doesn’t fully cover what you owe on the loan and you’re in an accident that totals your car. This may be available from your local bank or credit union lender, just like extended warranties and other options, so be sure to shop around for these items as well.
Shopping around for the loan — not just the car — could help you lower your monthly payments, lower your interest rate, enjoy a shorter term, and benefit from less expensive options like extended warranties or GAP insurance.
Remember, many dealers work directly with lenders in the community, so you even may be able to ask for financing through your preferred, local credit union or bank right at the dealership.
Do your research and happy car — and loan — shopping.
